A market recap on Perth through the eyes of Blake Lieschke - State Director- Residential WA
Perth is literally in the eye of the perfect storm. On one side, we have a rental market with a vacancy rate of circa 0.7% and an acute shortage of rental stock, almost entirely across the metro area. This week I accidentally stumbled across a long line of at least 60 groups, lining up for a rental viewing, all with pre-filled rental applications in hand for a modest 1x1 apartment on the fringe of the Perth CBD. I could see the anxiety and frustration across their faces. As they each waited their turn, I casually chatted to as many of the groups as I could before they were ushered into the unit. I quickly learned that the majority were prepared to offer between $50 and $150 above the unit's $425 asking rent. This is just one example of the rental crisis facing Perth at present.
On the other side, we have a market with less than 8,000 properties for sale, almost half what would be considered Perth’s natural equilibrium. The latest data suggests that Perth’s median selling days are under 20. To say that it’s a seller’s market is the understatement of the year. In many suburbs, especially affordable western, inner-city and inner northern coastal suburbs, buyer demand outstrips supply 10 to 1. Some suburbs like North Beach, at the time of writing, didn’t have a single house listed for sale that wasn’t under offer. Not a single house. To further put this into perspective, last week Perth sold 843 properties. That’s over 10% of Perth’s total available stock sold in 1 week. We have seen value growth in the range of 10-15% over the last 6 months in many suburbs.
Perth’s market was showing healthy signs of recovery in late 2019. COVID-19 certainly threw a spanner in the works, but this uncertainty immediately went by the wayside as soon as government stimulus Home Builder & Building Bonus Grant were introduced. Returning expat demand, both domestic and internationally combined with the mining industry required employees to remain WA residents during our Hard Border led to a rush to secure housing both on the rental and owner-occupier side, putting further pressure on a market where demand was already beginning to surpass supply. This coupled with record low-interest rates and obvious signs that the Perth market is no longer on a negative growth trajectory has drawn in many first home buyers and investors previously waiting on the sidelines for the market to hit the bottom’. The big question is, how long can this activity last?