Perth has experienced explosive house price growth since the beginning of the COVID pandemic.
According to PropTrack, Perth dwelling values have surged by 79% since March 2020, driven by an 83% rise in house values.
Separate dwelling value data from CoreLogic shows that Perth dwelling values continue to lead the nation, rising by 0.8% over the past 28 days.
There is bad news ahead for prospective first home buyers in Perth, with SQM Research forecasting strong 14% to 19% growth next year.
In his latest Housing Boom and Bust Report, SQM founder Louis Christopher said that he was “bullish” on the Perth housing market last year, forecasting it to rise between 5% and 9% in 2024.
“As it turns out, we still weren’t bullish enough, with Perth housing prices going to finish 2024 off at nearly up 25%”, he said.
“A combination of solid employment growth, juicy GST tax receipts, strong population growth and ongoing under-building all contributed to the Perth housing boom in 2024″.
Christopher added that Perth’s housing shortage continues to worsen.
“When I look at dwelling commencements, WA is currently building at half the rate it did in 2015”, he said.
“There is no building surplus coming for 2025, with WA set to build just 16,800 dwellings in 2025 with the state expected to expand by at least 90,000 people next year”.
Trent Fleskens, managing director of Strategic Property Group, concurred, predicting further increases in dwelling values until the gap between the construction of new homes and the state’s expanding population narrows.
“WA households on average hold two people per dwelling. Last year 98,000 people entered the state”, he said. “Therefore, we would need around 49,000 new homes to accommodate just these new entrants. We built 17,000 new houses last year and that was at our labour capacity”.
The gap between population demand and supply is indeed massive, as illustrated below.
Investor demand is also running hot, which is crowding-out first-home buyers.
To add further insult to injury, prospective Perth home buyers are also contending with severe rental inflation, making it harder to save a deposit.
Source: CoreLogic
The bottom line is that prospective Perth home buyers are facing a dismal 2025 as they battle soaring prices, rents, and investor demand.
