Perth overtakes east coast to become Australia’s hottest capital city property market

The Australian property boom has shifted from east to west, with buyers and renters tussling for a limited number of Perth homes and creating a housing crisis for those left behind.

Perth has become the hottest selling market among state capitals, with homes listed for a median 11 days before being sold, according to CoreLogic data calculated for Guardian Australia.

That was 10 days less than the next fastest-selling state capital – Brisbane – highlighting the gulf between Perth and the rest of the country.

CoreLogic’s research director, Tim Lawless, said buyers were probably feeling a sense of urgency given they had little choice or ability to negotiate in Perth.

“The figures indicate a housing market that is skewed well towards sellers rather than buyers,” Lawless said.

Across all state capitals in the December quarter, the median number of days that properties spent on the market was 27.

Renters in the Western Australian capital were also under intense pressure, with Perth tenants now entering their fourth consecutive year of historically low stock, which has been pushing rents higher. Perth has the tightest capital city rental market in the country, with vacancies at 0.4%, according to SQM Research.

People are too afraid to make complaints in case it puts their tenancy at risk.”

Mandy Dehnel, who supports a team of financial counsellors at The Salvation Army, said the crisis was so extreme that even people with good incomes were struggling to find suitable housing.

“There are horror stories of rentals which aren’t really rentals because they are more like overcrowded boarding situations,” said Dehnel, the Moneycare manager for Western Australia.

“People are also too afraid to make complaints in case it puts their tenancy at risk.”

The tightness in the Perth property market, which is also evident in regional areas, comes after a relatively subdued period when price growth failed to keep pace with the sharp rises recorded in other major cities, led by Sydney and Melbourne.

As a result, housing construction in Perth was subdued for several years, creating a sharp supply and demand imbalance. This has been exacerbated by strong population growth and a mining sector that is expanding well beyond its iron ore and gold base to other labour-intensive projects, including lithium mines.

Dehnel said one Perth tenant was told a week before Christmas her rent would be increased by $100 a week, a 20% increase.

“People are delaying medical and dental appointments because it is something they can put off, but it has such a long term impact on their health,” she said.

The state Labor government has set up a new housing unit designed to boost supply, which is scheduled to become operational this month. The initiative sits in the government’s treasury department, a sign of the significance of the housing crisis.

The government has also said it is investing record amounts in social housing and homelessness measures.

While large parts of Australia have been grappling with a housing crunch for years, some of the intensity has seeped out of the east coast market.

This is linked to the lagged effect of rising mortgage rates, which are now starting to bite, according to AMP. The impact of higher rates is showing up in recent price falls in Melbourne and a slowdown in gains in Sydney.

The investment group believes the Sydney and Melbourne markets are more at risk of a price pullback but other cities – including Perth, Brisbane and Adelaide – are likely to remain strong.

The main risks to property prices are rising unemployment levels, increasing mortgage rates and an unforeseen global event, such as a banking or debt crisis, according to investment property managers. But a lack of supply means there is little relief for tenants on the horizon.

Perth-based property valuer Gavin Hegney said investor funds were marching confidently across the Nullarbor, pushing up prices.

“It’s a boom, there’s no other way to put it, and eastern state investors have been really active in Perth,” Hegney said.

“There’s an undersupply of dwellings relative to the population growth, but the response time is just too slow.”

He said the situation was so bad that an “emergency measure” should be deployed, such as allowing homeowners to rent out rooms with no negative tax consequences.

Courtesy of : https://www.theguardian.com/australia-news/2024/jan/07/perth-overtakes-east-coast-to-become-australias-hottest-capital-city-property-market