Perth has been lauded by industry experts as a top capital city market outperformer in 2021. With Peth recording the strongest quarterly value increase of all capital cities (at 4.3%), the real question is: will Perth continue to sustain its growth potential in 2021?
Firstly, let us reflect on what are the key factors that have driven this growth. Economists have attributed the growth primarily to:
- A COVID-induced mining boom led.
- General economic conditions in WA have also been favourable, with the State government avoiding a deficit and forecasting a $3.1 billion surplus in 2021 (Australian Financial Review).
- A shift in demand to regional WA due to changes in working conditions.
- Housing supply shortage. The Real Estate Institute of WA (REIWA) reported that listings had dropped to a 10-year low, with only 7899 properties listed for sale at the end of February.
- The introduction of government home building incentives have supercharged the Perth market, aided the construction industry and drove a huge increase in demand for vacant land.
- Interest rates in Australia have fallen to record lows which encourages affordability, borrowing and consumer spending.
Although WA capital saw both house and unit markets record an annual rental growth compared to the same period last year where house rents rose by 13.2% and rents climbed at 10.2%, the growth recovery is not uniformed across all suburbs and there are those that are performing better than others. Vacancy rates have also declined from 0.7% to 0.6% from January to February as compared to 1.8% in February 2020.
And even though rental prices have gone up, just this month, the Australian newspapers still recognise Perth as the most affordable capital city in Australia, for renters. According to data from the National Housing Finance & Investment Corporation “The most affordable city for renters (by far) is Perth. Renters in the bottom 40 per cent of income earners can afford to pay for around 90-100 per cent of the rental properties in the market”.
The overall outlook still appears very optimistic with the mining industry growth, cheap finance available, strong performance across the premium property markets, a strong State economy and a growing confidence in the property market.
