REIWA ups house price forecast

The Real Estate Institute of Western Australia has revised its predictions for house price growth in 2021, forecasting a 15 per cent increase by the end of this year.  

REIWA president Damian Collins said the institute revisited its forecast following strong price growth performance recorded during the first three months of 2021 – during that time CoreLogic’s home value index recorded a five per cent increase in Perth house prices.

“In November 2020 REIWA forecast prices in WA would increase as much as 10 per cent in 2021, however based on what we have seen in the first quarter of 2021, we now anticipate growth of 15 per cent by the end of the year,” Mr Collins said.

“There are a number of factors contributing to the strong price growth we have seen and expect to continue to see this year.”

CoreLogic’s national home value index recorded a 2.8 per cent rise in March - the fastest rate of appreciation since October 1988 (a month that achieved a 3.2 per cent increase).

“WA is still the most affordable state in the country when comparing income to median house prices,” Mr Collins said.

“The current Perth median house sale price is $495,000, which is down from the peak of $550,000 in 2014.

“We hit the bottom of the market around June last year following the COVID-19 lockdown and since then consumer confidence has returned. Buyers who were waiting for the bottom to hit are now eager to get into the market and take advantage of the record low interest rates.”

Mr Collins said there was a fundamental imbalance between supply and demand in Perth’s home sales market, with more buyers than houses listed for sale, which he said was driving up prices.

“When you factor all of these components in, it is a perfect storm for higher-than-expected house price growth this year,” he said.

“We need to get more homes and apartments built. Until we see supply catch up with demand, we will see prices continue to rise.”