Perth Market Returns To Strength Despite Year Of Uncertainty

2021 has started well for Perth’s real estate investors, with property values rising and rents increasing.

We explore the data, as well as the trends behind the data, to give you the full picture on what has been happening in our local property market.

A year of strong growth

Despite the uncertainty caused by the COVID-19 pandemic, Perth homeowners and investors have shown enormous confidence in our local property market through the first half of 2021. According to CoreLogic, the median dwelling price across our city has lifted 8.5% since the start of the year. For houses as opposed to apartments, the news gets even better, with the median price rising and impressive 8.8%. That means, for instance, if you own a Perth house that was worth $500,000 at the start of the year, you could now expect it to be valued at $544,000 – not a bad return on your investment.

What’s been fantastic about the current growth has been that growth has been so widespread with almost all suburbs experiencing rising prices.

That said, there have been some standout performers, especially at the top end of the market. Here, increased demand from local upsizers and ex-pat buyers is combining with lower-than-usual stock levels to generate real competition in the market. This means we’ve seen double-digit growth over the past 12 months in many suburbs – especially premium ones – as the table below shows.

Suburb Median house price Growth over past 12 months
Cottesloe $2,300,000 15%
Subiaco $1,325,000 12.77%
City Beach $1,927,500 19.72%
West Perth $790,000 18.35%
South Perth $1,358,000 10.86%


Suburb Median house price Growth over past 12 months
Wembley Downs $365,000 16.8%
Subiaco $535,000 12.04%
Mosman Park $385,000 10.0%
Mount Lawley $390,000 11.43%
Bassendean $315,000 10.53%

What’s driving the market right now?

Property prices are set by the laws of supply and demand and, on the demand side of that equation, we’re seeing buyers return to the market in numbers that just haven’t been visible in recent years. Many have been lured in by historically low-interest rates and government buyer incentives, as well as the simple fact that Perth property remains remarkably affordable compared to most cities.

For instance, the Perth median dwelling price remains $521,688 compared to $740,562 in Melbourne and $970,355 in Sydney. When you consider that average full-time earnings in WA are higher than anywhere in the country except the ACT, property prices in our city are still attractive. In fact, on an income to price ratio, Perth is the most affordable capital city in the country.

Another factor at play in our current market is the widespread relief and appreciation of how well our State has handled the COVID-19 pandemic so far. This, along with a rejuvenated mining sector, has pushed consumer confidence to an 11-year high, according to the WA Chamber of Commerce and Industry.

Generally, when people are confident in the economy, they’re also prepared to pay more to secure a property and that’s what we’re seeing right now.

Rental market tightens even further

One further market driver is the current tightness in Perth’s rental market.

By March 2021, the vacancy rate across Metropolitan Perth was below 1.0%. To put this in perspective, REIWA says that a vacancy rate between 2.5% and 3.5% signifies a balanced market.

The lack of available stock has driven rents upwards 16.% over the past 12 months, according to CoreLogic. Meanwhile, REIWA says that the average rent lifted $15 in March alone, to stand at $410.

This, combined with generous government subsidies, is bringing first home buyers into the sales market in big numbers because buying a home is often now cheaper than renting.

What lies ahead in 2021?

Perth’s average gross rental yield is now 4.4% – substantially higher than Melbourne (2.9%) or Sydney (2.6%).

This is exciting news for landlords and it also shows why Perth should be such an attractive proposition for national real estate investors. This is one of the few major cities where it’s not out of reach to positively gear home for many investors. And when combined with the potential capital gains likely to flow from our State’s growing economy, we could be in for a very positive year ahead.

Many economic forecasters agree. After all, while the past few years may have been difficult to endure for many investors, the fundamentals underpinning our market have changed. The economy is looking stronger, listings are low and the rental market is being squeezed. Importantly, while Perth property prices are rising, they are still well short of where they were five years ago – an indication that there is plenty of room for further growth if the current economic conditions continue.

Little wonder then, that ANZ Bank has forecast 19% price growth for Perth property over this year. The Real Estate Institute of WA (REIWA) has also revised its earlier forecasts of a six-10 per cent rise in house prices and is now predicting 15% growth over 2021.

When combined with high yields, we could be in for a bumper year ahead.

Want more?

For more expert advice about the Perth property market, contact our friendly team today.

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