Property prices to hold firm, rent prices to increase: REIWA market forecast update

20 April 2023

"REIWA’s 2023 property market quarterly update estimates Perth house prices will remain steady in the first half of 2023, while rent prices will continue to increase."

REIWA’s 2023 property market quarterly update estimates Perth house prices will remain steady in the first half of 2023, while rent prices will continue to increase.

“Perth’s median house price increased marginally in the first quarter of the year, rising 0.9 per cent from $540,000 at the end of 2022 to $545,000 at the end of March,” REIWA CEO Cath Hart said.

“The local market has shown remarkable resilience in the face of 10 interest rates rises, backed by strong demand and affordable prices.

“We expect prices to continue to hold firm in the next quarter even if there are one or two more rate rises. However, should we see a period of interest rate stability or even cuts, we would expect to see consumer confidence rise, boosting activity and prices.

“Low price growth is still a possibility across 2023.”

It is a different story in the rental market, with prices up 5.8 per cent since the end of 2022.

“This has been fuelled by declining supply and increasing demand and more rent price increases are expected this year,” Ms Hart said.

“It will take something significant to change the rental market.”

Perth sales market

Properties continued to sell quickly in the first quarter of 2023, with good numbers at home opens and many properties still receiving multiple offers.

“Homes sold in a median 13 days in March,” Ms Hart said.

“The number of listings for sale hit a twelve year low of 6,931 at the end of December 2022 and we have seen the number of properties for sale drop even lower than that recently.

“Properties are still coming to the market at good numbers, and at levels higher than pre-COVID, so the low number of listings on www.reiwa.com is more a reflection of the speed of sales, rather than a lack of properties.

“We do expect the speed and number of sales to decline slightly in April, which is typically a quieter month.”

Demand for housing in WA is expected to stay relatively strong, supported by population growth.

“WA’s population grew 1.8 per cent in the year to September 2022 and the State Government’s recent Mid-Year Budget review forecast further growth of 1.5 per cent in 2022/23 and again in 2023/24,” Ms Hart said. 

“As more people arrive in WA, this will maintain the demand for housing and keep listings low. And with such tight rental conditions, more people will look to buy rather than rent.”

Long-awaited building completions remain a wild card for both sales and rental markets.

“As more COVID building-incentive new homes are completed, there may be an easing in both markets, but this will be offset by population growth,” Ms Hart said.

“New home approvals have also been falling, so this will also affect housing supply in the future.”

Perth rental market

Ms Hart said 2023 was already proving to be challenging for tenants.

“The vacancy rate was 0.7 per cent in January, February and March,” she said.

“Homes are leasing in a median 14 days and property managers are still seeing queues at home opens and receiving multiple applications.

“Unfortunately, some tenants are using platforms like Gumtree or Marketplace to look for rental properties and falling victim to scammers.

“We remind people they should follow proper processes and to use legitimate real estate websites to apply for rentals.”

Ms Hart said declining supply and increasing demand are at the heart of the issues the rental market is facing.

“Investors continue to leave the market, with 800 fewer rental properties available now than at the start of the year and a decline of 19,200 since January 2021,” she said.

“And while many of our members are reporting interest from Eastern State investors who see value in the WA market, it hasn’t been enough to replace the properties that have been lost.”

The proposed changes to the Residential Tenancies Act (RTA), and calls for other reforms such as rent capping and limiting when increases can take place, remain a concern for 2023.

“The vast majority of rental stock in WA is owned by small, private investors,” Ms Hart said. 

“They’re listening to the debate over rental reform in various states and they’re telling us they’re very nervous about some of the changes being considered.

“There are already significant pulls to exit the WA market with 10 interest rate rises, a bulk of mortgages set to switch from fixed to variable-rates this year and a broad recovery in WA home values post-COVID.

"Policy needs to prioritise the needs of the community, and what the WA community needs right now is more people who are willing to buy and retain a home that they will lease to someone else.”