Perth and City of Melville Real Estate Market Wrap
In Perth, the new median high house price reached $560,000 in July, a 0.9% increase from June and 4.7% higher than the previous year. The city’s tight supply is propelling these prices, with only 5,181 properties available to buy at July’s end, 3.1% lower than the previous month and nearly 40% less than the same time last year. Though the number of listings may rise as spring nears, a return to a balanced market will not be immediate.
Perth’s property market’s continued demand was underscored by a repeat of June’s record low selling time, with houses on the market for a median of just 10 days. In some suburbs, median days on market fell to as low as 3 days in July, underlining that buying activity in Perth is as competitive as ever.
With over 20,000 homes currently under construction in Perth, there will be a slight release of housing when occupants move into their new residences. However, this shift is not expected to have a substantial downward effect on prices, as population growth will likely balance the slight increase in supply.
Investor activity in Perth’s market has returned to its long-term average, accounting for 28% of mortgage demand based on the value of new commitments. Despite having one of the lowest levels of investment activity, Perth boasts the highest gross rental yields among state capitals at 4.9%, and possibly the best opportunities for capital gains, supported by higher yields, lower entry prices, and rapid population growth due to both overseas and interstate migration.
The number of rentals dropped 11.8% from June, and 16.4% less than July 2022. Nevertheless, there’s optimism for tenants, as an upsurge in investor activity may lead to a moderate decline in the vacancy rate in upcoming months. Coupled with tenants moving into newly built homes, and increased requests for additional occupants as renters turn to group housing to share escalating rent costs, this could ease some pressures.
The Perth property market has displayed remarkable durability against 12 interest rate hikes over the last 14 months, supported by vigorous demand, a robust economy, low unemployment, and reasonably priced housing. Specifically, Perth benefits from lower average loans, higher average wages, and affordable housing, making us well-positioned to handle increased repayments.
In the City of Melville, homes that are well-presented and effectively marketed are selling almost as quickly as they are listed, often with multiple offers, and we are seeing moderate price growth across most suburbs.
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