More growth for Perth housing market

Australian home values climbed 2.1 per cent in February – the fastest rate the monthly value has risen since August 2003, according to CoreLogic's latest national home value index 

Record-low mortgage rates, an uptick in economic conditions, government incentives and low levels of housing stock were some of the factors CoreLogic cited as key drivers boosting housing values across the country.

Housing values increased across all capital cities, led by Sydney and Hobart (both up 2.5 per cent), followed by Melbourne (up 2.1 per cent), Perth and Brisbane (both recording 1.5 per cent month-on-month growth).

Source: CoreLogic

CoreLogic research director Tim Lawless said a synchronised growth phase like this hadn’t been seen in Australia for more than a decade.

“The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fuelled buyer demand,” Mr Lawless said.

“Whether this newfound growth in Sydney and Melbourne can be sustained is unclear.  Both cities are still recording values below their earlier peaks, however at this current rate of appreciation it won’t be long before Australia’s two most expensive capital city markets are moving through new record highs.  

“With household incomes expected to remain subdued and stimulus winding down, it is likely affordability will once again become a challenge in these cities.”

During February, the median dwelling value in Sydney rose to $895,933, the country’s most expensive city, with Melbourne close behind with a median home price of $717,767.  

Perth maintained its title as one of the most affordable cities, with a median value of $491,795, just above Adelaide and Darwin.

Meanwhile, loans for new home building continued to break records in January (the latest data available).  

Housing Industry Association economist Angela Lillicrap said the number of loans for the construction of a new dwelling increased for the seventh consecutive month.

“The number of construction loans to owner occupiers in the three months to January 2021 is 45.8 per cent higher than the previous quarter and is more than double the same time the previous year,” she said.

“Households have changed their spending habits in response to the COVID-19 interruptions. Many have diverted funds that would have typically been spent on travel and entertainment into improving their homes.

“Lending for renovations also continue to be elevated. The value of loans for alterations and additions in the three month to January 2021 is 40.8 per cent higher than the same time the previous year.

“Investors are also returning but were more active in the market for established dwellings. The value of lending to investors increased by 17.6 per cent in the three months to January 2021 from the previous quarter.”

In three months to January 2021, the number of loans taken out by owner-occupiers for the construction of a new home tripled in WA when compared with the same period last year.

WA delivered the largest increased (up 221.7 per cent), followed by Queensland (up 164.9 per cent) and the Northern Territory (up 160.3 per cent).

Building approvals fall, but still high

The latest data from the Australian Bureau of Statistics revealed private sector housing approvals fell 12.2 per cent to 12,125 in January.

However, these approvals were still 38 per cent higher than the same time last year.

“Narrowly behind December, the strong result in January was the second largest number of detached approvals in any month since the series began in 1983,” Ms Lillicrap said.

“Building approvals data lags behind other leading indicators including new home sales and housing finance data.

“We saw a spike in new home sales in December arising from HomeBuilder. These projects will continue to progress through the administrative process to gain building approval in the coming months.”

In the three months to January 2021, WA led the field by a landslide - recording the largest increase (124.1 per cent) in detached dwelling approvals compared to the same time last year.

Tasmania followed with a 60.6 per cent rise.

“With home buyers able to access the reduced HomeBuilder grant until the end of March we expect sales and approvals to remain elevated for several more months,” Ms Lillicrap said.

“The majority of homes approved in January are likely to already have now commenced work on site. The strong pipeline of work will ensure ongoing employment in the sector through 2021 and into 2022.”

Overall, building approvals fell 19.4 per cent in January, led by a 39.5 per cent drop in the more volatile "dwellings excluding houses" component.

In the three months to January 2021, the number of multi-unit approvals declined across all states when compared to the same time last year, except in WA and Queensland.

WA recorded an uplift of 65.2 per cent, with multi-unit approvals increasing in Queensland by 38.3 per cent.

“There is a significant divergence in the conditions facing detached builders versus apartment builders,” Ms Lillicrap said.

“Multi-unit approvals fell by 5.7 per cent in the three months to January 2021 compared to the preceding quarter and are 15.6 per cent lower than the same time last year.

“Multi-unit projects that are gaining approval at this time are likely to have commenced the planning and building approval process before COVID.

“The apartment market is likely to be constrained until overseas migration returns.”

Perth listings drop to 10-year low

Sales listings for homes in Perth fell to 7,899 properties by the end of February – the lowest volume the Real Estate Institute of Western Australia has recorded in a decade.

REIWA president Damian Collins said this was the seventh consecutive month listings for sale had dropped in Perth.

“We’ve seen an extraordinary decline in listing volumes in a relatively short amount of time. In the span of a year, listings have dropped 36.5 per cent to now sit below 8,000 for the first time in about a decade,” Mr Collins said.

“Buyers are very active in the market and soaking up stock at a rapid pace.”

The median sales price in Perth for February was $490,000, according to REIWA data.

“There were 50 Perth suburbs that saw their median sale price increase in February,” Mr Collins said.

“The suburbs with the biggest increase were East Fremantle (up 5.7 per cent), South Yunderup (up 5.2 per cent), Seville Grove (up three per cent), Cloverdale (up 2.7 per cent) and Ballajura (up 2.5 per cent)."

REIWA found Wellard, Landsdale, Warnbro, Gosnells and Bayswater also recorded median sales price growth.

The median time to sell a property in February was on par with January (21 days), but 25 days faster than in February 2020.

Mr Collins said the last time the industry saw houses sell this fast was in 2006.

“It’s a hot market and buyers are understandably feeling pressure to make a swift decision,” he said.

“While it’s important to act fast on a property you’re interested in, I encourage buyers to use caution and not panic buy or get themselves into a situation where they pay over and above what the property is worth.

“Yes, property prices have increased in the last six months, but they remain below what they were five years ago so there are still good deals to be had.”

Rental price remains at five-year high

REIWA found Perth’s median rental price in February maintained January’s five-year high of $400 per week – $40 more per week than the same time last year.

About 258 suburbs across Perth recorded an increase in rent last month; Subiaco delivered the biggest increase in median rent (up $23 to $723), followed by Scarborough (increasing by $20 to $520.

Rental stock supply continued to be tightly held, with 2,839 properties listed for rent in Perth on reiwa.com at the end of February.

"This marks the sixth consecutive month we’ve seen listings sit below 3,000. Perth desperately needs an influx of rental stock in the market to provide renters with more housing options,” Mr Collins said.

“Perth is in desperate need of more rental stock to help ease the rental shortage. In order to do this, we need to entice investors back to the market.

“Median leasing days are the lowest they have been since June 2013. Like we are seeing in the sales market, with so few available listings, tenants are having to act very quickly to secure a rental.

“While the end of the rental moratorium later this month will remove one of the barriers for investors, more needs to be done to encourage residential property investment in WA and ensure there are enough rentals in the market to keep up with tenant demand.”