Top, middle or bottom of the market – where is all the action?

With Perth’s median house price hitting a new high last month there is a lot of talk about what is driving the market.

Is the top end of the market leading the way? What price brackets are seeing the most growth?

REIWA Research has crunched the numbers to view the changes in the various market segments and you might be surprised to see where the action is.

Sales activity

The most sales activity is in the $500,000 - $1million price bracket and the number of sales in this range has been growing steadily over the past two years. Sales over $1 million have been fairly stable, while the number of sales in the sub-$500,000 bracket has fallen significantly.

REIWA CEO Cath Hart said this was more a reflection of fewer properties available in this price range than a decline in demand.

“There is strong interest in the lower end of the market, and this is highlighted by how fast properties in this price range are selling,” she said.

“The majority of the fastest selling suburbs in our end of month reports tend to be under the Perth median house price and the fastest selling suburbs for the 2022-23 financial year were all priced well below the Perth median house price. This was a big change from the previous financial year’s Top 10, where all the suburbs were over the Perth median house price at that time.

“The rise in interest rates has clearly played a role in this trend.  Affordability and serviceability have been a focus for buyers in the past year. They’ve seen their borrowing capacity reduced significantly, are factoring in the possibility of more rate rises and are spending wisely. They’re seeking value and acting quickly when they see it.”

Price growth

Demand for lower priced property has seen prices rise strongly at the lower end of the market.

The lower quartile* house price rose 8.6 per cent to $456,000 in the year to September. The overall median house price rose 5.6 per cent to $570,000 over the same period and the upper quartile house price rose 2.7 per cent to $770,000.

The lower quartile also recorded the strongest growth since Perth’s most recent low, rising 28.7 per cent since 2020.

Looking further back, price growth has been similar across all quartiles, with the upper quartile showing slightly stronger growth since the market’s previous peak in 2015.

Ms Hart said the competition for more affordable homes, combined with limited supply of homes in lower price ranges was putting upward pressure on prices.

“As well as home owners seeking affordability, Eastern States investor interest is also focused on the lower end of the market as these homes are well-priced, particularly when compared to east coast markets, and many offer good rental yields,” she said. 

* Quartiles are a type of percentile. The lowest quartile is the price at the 25th percentile, meaning that 25 per cent of the sales fall below this price. The median is the 50th percentile, meaning that 50 per cent of the sales fall below the median. The upper quartile is the price at the 75th percentile, meaning that 75 per cent of the sales fall below this price.