Perth Housing Market Forecast for 2022
What’s the outlook for the Perth housing market for 2022?
Many people want to know the answer to this question before the start of next year. The real estate markets across the country are currently undergoing several challenges, which may have a massive effect on property prices.
But if you are a property investor, you’re grateful that they are left mainly unscathed despite state and territory lockdowns taking place in 2021.
House price growth, however, has slowed down. But it seems that it does not matter. Why is it so? The reason is behind the property values, which continually rise in Perth and many other parts around the country.
Capital cities have seen a double-digit increase in prices this year alone:
- Sydney rose to almost 20% in prices
- Melbourne also increased 11.8% in housing prices
- Brisbane grew 18.6% in property prices
But last July, Perth’s property prices dwindled. Could this be the beginning of the end concerning the interest in purchasing a new property?
Growth Momentum Showing Signs of Slowing Down
Property prices are believed to have reached their peak in March 2021. Soon after that, the prices began easing, not just in Perth but in other capital cities, as well. As a result, many vendors started to hold back, which meant that the property market became a bit sluggish. Properties for sale lowered in numbers, perhaps due to the uncertainties brought about by the effects of the ongoing pandemic.
Lockdowns surely did not benefit the housing market in Perth. But it’s not hard to see that the eventual lessening in restrictions around the city and state-wide will cause a swift rebound in the housing market. This will result in price increases once again, which experts expect by the end of 2021.
Property Price Forecasts
Australia and New Zealand (ANZ) Banking Group recently joined in with other major banks, updating its housing market prediction. The bank agreed that the market showed its resilience despite the unforeseen extended lockdowns, particularly in NSW and Victoria. Along with other central banks, ANZ predicted that the house prices would increase 20% by the end of the year.
The price forecasts are higher than the previous numbers, which reflect the efficiency of the Australian property market to adjust to lockdowns. There was a significant issue in the past, which resulted in the prices decreasing, perhaps due to fewer buyers. But this time around, the situation is different. Buyers have increased as they overcome matters concerning remote auctions. Many ex-pats have continued to join investors, as well. Thus, property demand has increased in Perth and several other places. Obviously, with the increased demand comes an increase in prices.
The 20% increase mentioned in the banks’ forecasts is higher than the gains predicted previously. ANZ first revealed their prediction, which was 15%. The bank also said that the projected price growth might slow down in 2022, leading the increase to only 7%. But the new prediction negates the pessimistic forecasts offered by the banks in 2020.
To see the progress, let’s compare how the market looked like from 2018:
- Australia saw a five per cent reduction in housing prices in 2018.
- Perth experienced a five per cent decline in 2018, which grew to about seven per cent in 2019.
- The rest of Australia saw a three per cent increase in housing prices in 2019.
- Perth was one of the two capital cities that encountered losses in the housing market in 2019. Darwin was the other city, which suffered a 10% decrease overall.
- However, things were looking up for Perth in 2020. A three per cent increase took place during this year and is expected to grow to about 11% to 12% by the end of 2021.
- In 2022, Perth is projected to see a weaker housing market but will still be around 7% high.
- Australia is predicted to reach 21% by the end of the year but will dwindle to about 7% in 2022.
According to the research group CoreLogic, Perth home prices have increased only 0.3% over the past month and 1.6% over the past three months. For the last 12 months, the city enjoyed a 10.8% increase in home values. On the other hand, Regional WA only saw negative values: -0.2% and -0.4% for the past month and three months, respectively. All in all, there was a 5.5% increase in the dwelling values across regional WA. These numbers are from the group’s data for August 2021.
Is Perth a Good Place for Property Investors?
As mentioned, property prices in the city lagged compared to other capital cities. July was not a bad month, but we know that the Perth housing market can do better. During the said month, prices in the city had the lowest increase. Is this a signal for investors to turn their backs on Perth and look elsewhere? Of course not! There’s always a reason behind everything, and in this case, there are two significant causes.
First, the slowed increase is considered the aftermath of the First Home Buyer Grant (FHOG) coming to a close. New home buyers will probably wait for the next incentive from the state government; otherwise, they will look for ways to save on deposits. And this brings us to the second reason, which is affordability.
Compared to other homes around the country, Perth still offers the best prices. Whether you are an investor or looking for a house, the city has unbeatable pricing, unlike other capital cities, especially Sydney and Melbourne. Properties across the country saw almost a two per cent increase in July alone, meaning their dwelling values have surged more than 14% at the beginning of 2021. It’s the fastest recorded rise in home values in over 25 years.
For Perth homes, the prices only increased 0.3% in July where the median house value was $556,500. Apartments did increase 0.6% in prices, leading to a median value of $404,200 in the mentioned period.
It’s safe to say that Perth experienced a slow growth rate, especially if you compare it to other cities. But it does not mean Perth is not the ideal city for property investors. Experts believe that there is a steady uplift across the city despite the pending stoppage of the First Home Buyers program. Additionally, sellers have a good experience overall, stating that it only takes an average of 22 days to sell a property. That’s a huge improvement considering properties took 52 days to sell during the same period in 2020.
So, which parts of the city have the biggest median house price surge? According to the REIWA research group, Spearwood was the winner in July, selling houses at a median price of $485,000, which is a 3.3% increase. It is followed by Kingsley with a 3.1% increase and remains to have the highest median price, which is $620,000. The other suburbs with recorded increases in house prices were Leda, Success, and Greenfields.
The numbers are telling. Perth’s housing market is solid and steady. It has shown recovery, especially since the best-priced suburb also has attractive rates. Greenfields, which saw a 2.8% increase compared to its performance at the same time last year, performed exceptionally well. With a median housing price of $297,500, it remains one of the more affordable suburbs and continues to climb. It’s a great opportunity for both buyers and sellers.
Will 2022 Be a Good Year for Perth’s Sales Performance?
We have mentioned that Perth’s growth rate has slowed down in recent months. If you are a property investor, it’s not exactly the characteristic you’re looking for. But the low growth rate should not deter you from considering investing in Perth. Experts agree that the city has shown signs of still price growth, despite the lag. It remains in a strong position.
With the spring season approaching, selling properties will introduce better numbers in the coming months until we get to 2022. The rainy days are not the most enticing times for many buyers to go out and look at properties. And July had wet weather, prompting a lot of people to stay indoors and not participate in house inspections.
But if you take a good look at the outcome, you will see that July was still a strong month, especially for property sales in Perth. And it will only get better as spring draws near. That means you can expect to see more attractive figures for the Perth property market by the end of the year. The increase in housing prices will show investors the projected recovery of the city’s real estate market.
We should also take into account the decrease in property prices across the country after it peaked in March. The housing market has lost its steam if you look at the overall statistics. Once again, the end of the First Home Buyer Grant is attributed to the downfall of sales performance. Also, the property costs have increased, which did not encourage people to buy.
As we get to the end of 2021, the challenges for the housing market in Perth and WA will most likely stay the same: the supply and demand numbers and the affordability across the rental market.
Currently, rental property stocks continue to decline beginning in December 2020.
And with few choices left and high demand, it’s easy to see how the rent prices are pushed up substantially:
- Rental values increased 16.4% across Perth, which is one of the highest surges amongst capital cities, second only to Darwin.
- The median rent price in Perth remained steady in July at $425 weekly.
- The mentioned rent price increased over the last year. However, it is $25 cheaper compared to 2013 and 2014 prices.
The rental shortage may not be a negative indication of the state of the housing market in Perth, after all. It can be seen as an encouraging trend. If it persists, a balanced market can be achieved.
So, will the Perth housing market in 2022 outperform in 2021? It remains to be seen. Remember, though, that the house prices rose by 15% in 2021 despite lockdowns and other challenges. Let’s also add the poor performance predicted for 2021 the year prior. But the new forecasts are showing positive figures, which may be achieved by the end of the year. So, although the housing market is said to slow in 2022, the five to seven per cent jump is still respectable.