Perth real estate market heats up amid dwindling listings and competitive buying
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The Perth real estate market is witnessing a surge in buyer competition as the number of available listings dwindles, prompting potential homeowners to act swiftly to secure properties. Industry experts warn that the days of finding a bargain in Perth are long gone, with buyers urged to present their best offers or risk missing out.
Damian Collins, from property advisory firm Momentum Wealth, highlighted the current climate, drawing parallels to the market conditions observed 18 months to two years ago. “Particularly for single houses in that mid-point price range from $600,000 up to $1.5 million to $1.6 million – that’s the real hot spot,” he told realestate.com.au. This price range is witnessing intense competition, with properties attracting over 60 groups of potential buyers and receiving five to ten offers, a situation that has become increasingly common.
The fear of missing out (FOMO) is driving many buyers to take decisive action. Collins advises those in the market to streamline their buying conditions, consider bridging finance if necessary, and potentially negotiate longer settlement periods to facilitate the sale of their current homes. The imbalance between supply and demand is stark, with Collins estimating that the number of properties listed for sale is less than half of what it was during the last boom two decades ago. “So given the population is up 40%, 50% since then, pro rata it’s even worse – it’s a real problem,” he said. He added that the state is approximately 20,000 houses short of what is needed for a balanced market, indicating that prices and rents are likely to continue rising.
The latest PropTrack Listings Report underscores this trend, showing a 19.4% decrease in new homes listed for sale in Perth during August compared to the previous year, with overall housing stock down 3.4%. Bill Dimou, Raine & Horne Group’s network performance manager for SA, WA, and NT, noted that homes are not staying on the market for long, with an average selling time of just 15 days. “There’s no doubt when properties are low, when someone wants to sell a property, they know they probably will get a premium price,” he said. However, he also pointed out the dilemma for sellers who may struggle to find a new property without paying a premium themselves.
Dimou also highlighted the issue of unrealistic price expectations among some sellers. “I think that’s where they need a good agent to work with that will give them more of a realistic price of what they could get,” he said. “Because at the end of the day the market will decide what the value of the property is.”
Perth’s property prices have continued their upward trajectory, rising by 0.6% in August to reach an average of $865,000. Over the past year, property prices have increased by 9.2%, according to PropTrack. While the market has slightly cooled from the peak levels of the previous year, REA Group senior economist Anne Flaherty emphasised that the Perth market remains robust. The shortage of properties for sale, combined with a tight rental market, poses challenges for those needing to rent temporarily between selling and buying a new home. “For people who are not in a situation where they’re selling and buying in the same market, some might choose to delay selling to maximise the value at which they can sell the property for,” Flaherty said.
Despite a cooling in investor activity compared to last year, Flaherty noted that the fundamentals of the Perth market remain strong. “I think certainly some investors may feel as though Perth is a very competitive market right now and price growth has been very significant recently so that might lead to a bit of a cool off but having said that the fundamentals of the Perth market are still really strong,” she said.
Local investors continue to be active in the market, although there are fewer interstate investors than in previous years. Collins believes that if current economic conditions, such as population growth, persist, the Perth market still has room for growth. New dwelling approvals in Western Australia have increased by 28% over the last 12 months to July, a positive sign for future developments. “So most of that development is house-and-land – so properties in a lot of new areas – and that’s good because it is helping increase the options out there for people to buy, and that also leads to higher listings down the road,” Flaherty explained. However, she cautioned that there is a lag between approvals and actual construction.
Collins also suggested a short-term solution to alleviate demand for single-level houses: stamp duty exemptions for downsizers. “Even if it’s only for a couple of years that would certainly help those people saving them $30,000 – $40,000 so they can get into a villa/ townhouse,” he said. This measure could free up larger homes for families in need, but Collins warned that without significant economic changes or reductions in migration, the market will remain tight for years to come.