Perth Western Suburbs - Winter 2023 Market Update

The Western Suburbs housing market, along with Perth as a whole, witnessed a record-breaking pace of property sales this past quarter. The FOMO phenomenon crept back as prices hit new highs, lifting 1.2% over May to reach a median value of $606k, making Perth the only capital city where dwelling values had returned to record highs. In comparison, Sydney home values sat at 10% below the January 2022 peak. Despite the price growth, buyers kept buying. This exact situation occurred in 2006-2007, as the fear of being priced out by further interest rates spurred buyers to buy sooner rather than later. With this in mind, it is perhaps a surprise it took this long for this phenomenon to kick back in.

There were no signs of demand slowing down, despite the impact of eleven rate hikes up to May, which ultimately led to listings in the city drying up. The number of properties available for sale in the state’s capital city fell to 5,885 in May — representing an 8.8% decline from April and a staggering 29.3% fall from figures recorded twelve months ago. The last time listings were at such a low level was in mid-2010. Sales consistently outpaced the number of properties entering the market, while homes sold at an unprecedented average rate of just twelve days, the fastest median time on market since these statistics began to be recorded in 1998. In the Western Suburbs, fell at around 26% over three months, and the median number of days to sell dropped from 25 to just 18 over the same period.

These market conditions did have knock on effects, as Greg Williams from Duet Property said, “The big story of the market this winter, an extreme lack of supply, caused gridlock in some markets. Potential sellers, despite knowing that they could sell quickly and easily, were reluctant to list their property for sale until they had found somewhere to buy. When they saw a property they liked, these buyers tended to make Subject to Sale Offers which were quickly outgunned by Finance or Cash buyers”.

Property values held up well with sales activity the greatest in the $500k to $1m price bracket. The $1m+ range remaining fairly steady, and numbers declined in the under $500,000 bracket, partly due to lack of stock. Unit prices rose 1.7% in May to reach a median of $418.6k, the second cheapest in the nation behind Darwin. Poorly maintained, poorly presented properties were discounted by slightly cautious buyers, whereas strategically priced, well presented and well marketed properties favoured sellers in the western suburbs. Buyer preference was predominantly established houses, as people increasingly chose to buy established homes rather than tackle the prickly rental market or increasing costs and delays in the post-covid building industry. There was strong demand for properties in the Western Suburbs suitable for downsizers, and some supply began to trickle through the Nedlands re-zoning corridor. This should unlock larger, family style, homes elsewhere in the Western Suburbs. Inner-city precincts favoured by both downsizers and young families (such as West Leederville, Wembley, Subiaco and Shenton Park) performed well.

The rental market remained extremely tight, with properties snatched up at a median of 15 days during May, one day faster than April but one day slower than three months ago. Unit rents rose 5.2% in May, taking the annual change to 14.7%. House rents were up 13% over the year. Offering some positive outlook for tenants struggling to secure a place to live, there was strong interest from eastern states investors in buying blocks of land to build on, particularly in areas priced below the median house price. This may provide additional supply for the supply-scarce market, though it will likely take time to flow through to the rental market. With legislative uncertainty forcing investors out of the market in the past few years, the state’s announcement of a set of comprehensive changes to WA rental laws could reignite interest levels further among investors and landlords.

Buying opportunities could be found in land value properties, as Greg Williams added, “These properties represent good value, especially where buyers can rent them out for a year or so while the building industry normalises and then pursue long term plans. There is opportunity in this space for owner occupiers too. Roughing it with a purple bath for a few years is character building, and sometimes it is good to sit down when everyone else stands up”.

A standout sale placed on what is considered the best street in West Leederville, the 3 bedroom 1 bathroom 1 car garage property at 39 St Leonards Avenue offered a beautiful character home renovation project. Priced at $1.65m-$1.7m, it went to auction and sold for $2.25m with multiple bidders. An under bidder purchased 89 Tate Street, putting the statistic for character renovation projects above 600sqm into the $2m+ bracket.

Sales last 3 months: 7
Median House Price: $1.465m – (up 1.6% in past 3 months)
Stock on Market: 3.8%
Median Days on Market: 11
3 Month Change in Sales Volume – down 14.3%
12 Month Change in Sales Volume – down 25%
3 Month Change in Total Listings – down 7.3%
12 Month Change in Total Listings – down 20.3%

A renovated and extended character home, this blend of old and new one of a kind minimalist design at 138 Fairfield Street Mount Hawthorn presented a turnkey buying opportunity. This 3 bedroom 2 bathroom 2 garage on 445sqm block was expected to sell in the high $1m, the finished result garnering a sales price of $2.012m.

Sales last 3 months: 36
Median House Price: $1.2m – (decreased 1.5% in past 3 months)
Stock on Market: 4%
Median Days on Market: 15
3 Month Change In Sales Volume – up 12%
12 Month Change In Sales Volume – up 1%
3 Month Change in Total Listings – up 6.5%
12 Month Change in Total Listings – up 6.5%

A perfect example of the current market for modern, well-presented properties 13 Minibah Street is a 2015 built 4 bedroom 3 bathroom 2 garage on 655m2. Attracting 94 groups of buyers on its first Saturday and generating ten offers, four of which were cash, it resulted in a sale for $2.3m within just 3 days on the market.

Sales last 3 months: 22
Median House Price: $1.42m (up 2.2% in past 3 months)
Stock on Market: 4.6%
Median Days on Market: 16
3 Month Change in Sales Volume: -7.3%
12 Month Change in Sales Volume: -1.7%
3 Month Change in Total Listings: -6.7%
12 Month Change in Total Listings: 18.1%

The flow of new listings is typically subdued during the winter months, and with the rapid speed that properties are being acquired, these low stock levels will continue. However, supply growth is on the horizon, as potential sellers who sat on the sidelines while interest rates tore through the market, begin to reemerge. Buyers exhibiting patience and persistence can still succeed in finding their desired property, particularly if they enrol the assistance of a buyers agent with access to off-market listings.