REIWA data shows Port Hedland median house price almost doubled

Port Hedland was again the top performer, with its median house sale price increasing 40.6 per cent to $457,000, between the March 2021 and 2022 quarters.

REIWA deputy president Joe White said a combination of factors was contributing to Port Hedland's strong price growth.

"The Pilbara's thriving commodity market has had a positive impact on house prices in Port Hedland, particularly as the pandemic has shifted the mindset of mining companies towards favouring a more localised workforce," Mr White said.

COVID-19 has not only driven an all-local workforce, but also iron ore prices.

Relaxed COVID-19 restrictions in China have boosted construction rates and increased demand for raw Australian material.

Iron ore moved into surplus in the second half of 2021, and, on balance, is likely to remain in that state throughout 2022.

BHP vice-president of market analysis and economics Huw McKay said earlier this year that "most of our major commodities are trading at prices that are close to, or above, our estimates of long-term equilibrium".

Nutrien Harcourts WA real estate manager Darren Tapscott said this cyclical driven movement in Port Hedland property prices had been happening for up to 25 years, with property prices mirroring the cyclical demand for iron ore.

"As the mining activity picks up, so does the residential activity and the demand for houses, that causes the prices to rise significantly," Mr Tapscott said.

Elders Real Estate State manager Drew Cary said the big unknown will be resources industry and the projects associated with its development.

"WA is a very resource lead State economically, and if prices remain firm, inevitably this will lead to employment pressure on top of our nation-leading low unemployment - which will no doubt flow through to wage pressure and additional net migration, all of which in turn increase real estate activity if previous cycles are anything to go by," Mr Cary said.

Another important contributor to price growth was the WA government's Voluntary Buy-Back Scheme which began in June 2021.

The scheme allows eligible residential property owners to sell their property for a government-guaranteed premium market price.

"With more than 100 properties sold through the scheme in 2021 alone, this has had, and will continue to have, an impact on median house price growth in the Port Hedland regional centre," Mr White said.

Other regional centres to record notable annual growth in median house sale price were Geraldton (up 21pc), Broome (up 17.5pc) and Busselton (up 12.6pc).

In the latest quarter, the REIWA data showed Busselton had the biggest growth of median house prices by 5.5pc to $580,000.

Mr Tapscott said this growth in house prices was attributed to the affects of COVID-19.

"In the South West in particular, the pandemic encouraged a lot of people to make a bush change,'' he said.

"People from the city, particularly, wanted to buy in the South West because of the lifestyle that affords, with all the services and activities that are down that way."

This growth has been strong for the past 12-18 months and the coastal areas are unlikely to see a drop off in demand just yet.

The rise in South West house price is also due to an inability for house supply to fulfil increased demand, as REIWA data shows house listings fell more than 21pc in the Busselton regional centre during the quarter.

"Now that there are direct flights available from Melbourne to the Busselton Margaret River Airport, it will be interesting to observe what impact this has on house prices in the region,'' Mr White said.

But what does the property market have in store for the future?

Mr Cary said it was hard to tell.

"With respect to the residential market, both regionally and in the city, the crystal ball used for forecasting is cloudier now - than ever in the past 10 years,'' he said.

"There are a large number of competing forces that are both pushing and pulling the market, and it's unclear which will ultimately have the upper hand."

There are mixed levels of optimism within the real estate industry on interest rates.

"REIWA anticipates that WA's strong economy and forecast 1.2pc population growth, coupled with the State's housing shortage, will maintain demand for properties in the regions and continue to drive price growth." Mr White said.

However, Mr Tapscott warned that as we are moving out of the backend of the pandemic, and interest rates have risen (the cash rate rose a further 0.5 basis points to 0.85pc on Tuesday), consumers are likely to see a slight softening of the market through 2023.

"The threat and reality of interest rate rises over the next 18 months will naturally dampen both demand and perhaps supply of residential housing, as well as stifle the recent upswing in investors returning to the marketplace," Mr Cary said.

"But pushing against that are things such as the strong first home buyer stimulus being applied and encouraging buyers to leave the overheated rental market and make their first purchase," he said.

Net migration into WA after two years of border closures, along with increasing lead times and escalating prices of new homes means new home purchase is getting increasingly difficult.

"This makes second hand housing look more attractive from a price and availability perspective," Mr Cary said.