Border reopening drivers Perth housing demand says CoreLogic

By Leah Tindale
April 16 2022 - 10:00am
Housing market taking off again

IT will come as no surprise but the Perth property market has continued its growth trend this quarter being described as "re-accelerating off a low base".

According to the latest report from CoreLogic, this growth is in part due to the reopening of Western Australia's borders.

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As has been in recent months in the regional areas, prices remain strong and this has also been reflected in Brisbane and Adelaide.

Sydney and Melbourne, however, are recording flat or falling housing values.

From the first quarter of last year to the first quarter of this year, Sydney's price growth rate fell from 9.3 per cent to 0.3pc.

Similarly Melbourne saw its quarterly rate growth fall from 5.8pc to 0.1pc.

"Virtually every capital city and major rest of the State region moved through a peak in the trend rate of growth some time last year or earlier this year," said CoreLogic's research director Tim Lawless.

"The sharpest slowdown has been in Sydney, where housing prices are the most unaffordable, advertised supply is trending higher and sales activity is down over the year.

"There are a few exceptions to the slowdown, with regional South Australia recording a new cyclical high over the March quarter and some momentum is returning to the Perth market, where the rate of growth is again trending higher since WA re-opened its borders."

In the regions it is a slightly different story with the housing prices resisting the slowdown.

CoreLogic also reported that the combined regional areas have risen at three times the speed of the combined capital cities in the March quarter.

The value of properties in the regions has risen 5.1pc, continuing the strong growth rate for regional homes, which has been above 5pc since February last year.

Not surprisingly this strong growth has been led by rising population figures in the regions.

The Australian Bureau of Statistics (ABS) regional population growth figures for the financial year of 2020 to 2021 shows that almost 71,000 people moved to the regions, while the number of city dwellers fell by 26,000.

While people are moving to the regions, there still aren't enough properties to keep up with the demand.

Housing stock levels are 22pc lower than last year's level and 43pc below the five-year average, causing strong selling conditions in the regions.

The top three regional suburbs with the highest 12 month value growth include South Carnarvon, Rangeway and Sunset Beach, which had a 12-month change increase of 29.5pc, 26.3pc and 26p, and a median value of $239,418, $204,553 and $378,869 respectively.

Derby was the regional town which recorded the highest median house price growth in the year to the last quarter of 72pc.

The CoreLogic report also looks at the rental trends which it says price growth varies across Australia.

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On a national level rental prices are continuing to climb, with a rise of 2.6pc in the first quarter from 1.9pc in December last year.

Rental units are proving to be a good option, reaching a high of 3pc compared with house rents at 2.4pc.

"Through the pandemic to date, capital city house rents have risen by 13.8pc compared with a 3.4pc rise in unit values," Mr Lawless said.

"The net result is that renting a unit is substantially more affordable than renting a house.

"This affordability advantage, along with a gradual return of overseas migration, employees progressively returning to offices and inner city precincts regaining some vibrancy, are likely key factors pushing unit rents higher."

Nationally, CoreLogic believes the outlook for housing remains "skewed to the downside".

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With rising fixed-term mortgage rates, housing affordability, inflation, higher supply and low consumer confidence all contributing to the pessimistic position.

Some of these risks will be mitigated as migration returns, the low jobless rate continues and if new first home buyer incentives come into play, which would all help to balance out the market.

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