3 words to describe the Perth property market in 2024

One month already down in 2024. And in a year that will likely be as momentous as its predecessor, we have three words to describe what is ahead of Perth’s property market. 

Perth’s isolation and modest population size means it’s often left out of the headlines in east coast property publications. But in 2024, the Perth property market is squinting from the spotlight, with its continued performance characterised by increased competition and a shifting balance between supply and demand.

Want our take? Perth’s property market in 2024 will be categorised by three words:

• Constriction
• Confidence
• Competition

These words are all interlinked, and they’re all going to play a huge part in the calendar year (and let’s face it… well into 2025). Here’s how.

Constriction (of supply)

The Perth market has seen a huge fall in available properties for purchase in the past year.

From 8,000 properties on the market in early 2023, the January 2024 count of listings hovers around 4,700, leaving a scarcity that heightens both buyer and rental market challenges.

With a state population well exceeding two million, and the headcount growing by up to 26,000 each quarter (a whopping 1 per cent of the state’s population), the disparity between demand and the availability of established family homes—fewer than 2,000—further exacerbates the situation.

And while we’re here, why shouldn’t we talk of the rental challenges?

Desperation in the rental market mirrors the challenges in property purchasing. Of course the potent migration we’ve mentioned is a massive factor. But so is the construction of new homes.

The building industry has suffered both labour and materials setbacks since the pandemic, leading to incredibly long timelines for finished products. And this has created additional pressure on the rental market, as those embarking on residential builds still need a place to live during construction.

For the uninitiated, what does this all mean? Simply put, scarcity plus demand equals price rises. Our first “C”—Constriction (of supply)—is jet fuel for the skyrocketing values of Perth’s property values.

Confidence

While we don’t have a crystal ball, there is a near-absolute opinion that interest rates will not see the same trajectory that they have since 2022. It’s expected that rates will hold for several months before lowering towards the end of 2024. And that increase in certainty—or lack of uncertainty—will likely play a huge role in boosting the Perth property market even further.

Particularly for the higher ends of town.

A potential drop in interest rates could reshape the high-end market, making it more accessible to buyers. As the concerns surrounding interest rates eases, there is optimism that lower rates could drive even more activity in the Perth market.

And that’s considering the city’s already very affordable housing market in comparison to most east coast cities.

Perth Performance Advisory’s director and head of advisory, Lachlan Delahunty, featured on the Perth Property Show with Trent Fleskens earlier in the month, highlighting Perth’s stark contrast in affordability when compared to its eastern counterparts.

In Perth, affordability is at an impressive 33 per cent, meaning that only 33 per cent of an owner occupier’s salary is allocated to their mortgage. This is a sharp distinction from Sydney, where the same figure stands at a staggering 87 per cent. As Lachlan points out, that leaves little leftover for outgoings like living expenses, school fees and even property costs.

Even if WA median house prices were to double, the Perth property market would remain significantly more affordable than its eastern counterparts.

And that’s one reason an influx of east coast buyers have hit the Perth market.

Competition

WA home owners aren’t used to competing against Sydney-siders and Victorians for properties in their own backyard. But that is the new property market they play in.

With property price increases resulting in higher equity, local buyers are hitting the ground running, looking for their next investment or an upsize in residence. But they are joined by interstate investors seeking not only more modest price tags, but stronger yields.

The same conversation between Lachlan Delahunty and Trent Fleskens revealed that Western Australia’s robust 65 per cent increase in yields over the last four years has made it a very appealing market for those seeking better returns than the sub-3 per cent yields found in Melbourne and Sydney.

Trent makes a very valid point that WA has gained a national presence in real estate reporting, breaking away from being east coast-centric. The influx of east coast investors, attracted by positive media sentiment, is reshaping the market, emphasising the importance of informed decision-making for buyers both in and outside of WA.

2024 will be a huge year for Perth property

So, the demand is rife. And as we’ve already seen, supply is a huge issue for those looking for a roof over their heads or a property investment to enhance or diversify their portfolio.

And as the journey from building approval to construction to property completion is a potential two-to-four-year process, there’s no overnight medication that will cure our city’s supply woes.

Strong demand and scarce supply? No better two ingredients exist for burgeoning property prices.

This year, keeping a close eye on supply and demand dynamics, interest rate announcements and the influx of east coast investors will be crucial for those navigating this evolving landscape.

We couldn’t agree more with both Lachlan Delahunty and Trent Fleskens opinions: strategic planning and preparedness in this competitive market will undoubtedly be the key to property buying success in Perth this year.

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