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The undersupply of property in Australia’s western capital has led to a surge in dwelling prices, brokers have said.
CoreLogic’s latest Mapping the Market report has revealed that 98.1 per cent of house and unit markets across Perth increased in value over the past three months (to October), with 96.3 per cent of suburb dwelling markets in the capital reaching record high values by the end of October.
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Speaking to The Adviser, founder and broker of Success Financial Solutions, Sarcha Sagisaka, offered an explanation as to why this boom is happening.
“We’ve had a really flat period for about a decade until not too long ago and that was caused by a combination of the natural property cycle and the completion of mine construction,” Ms Sagisaka said.
“At the time, Sydney and Melbourne, which are always in the reverse cycle to us were going gangbusters, so that’s when we started having all these inquiries and when the government tapped APRA on the shoulder.
“That’s when APRA started controlling the property market by limiting the number of investment lines that banks could write, increasing serviceability buffers, and that way they were reducing the demand rather than addressing supply.”
She added that as a result, Perth’s market was put into an “extended downtime” when “it didn’t need it”.
Ms Sagisaka further stated the onset of COVID-19 further complicated Perth’s property market.
“Perth was just starting to recover and that’s when COVID-19 hit. And with that came all the supply and material issues and the labour shortages,” she said.
“So, now we have significantly built-up demand with no way of building out of it. We can’t build the additional supply we need. We have some of the highest incomes in the country and some of the lowest property prices, which is why [Perth’s housing market] is just going insane.”
According to CoreLogic, only one suburb in Perth saw values fall (Mount Hawthorn), however, only by a “mild decline of 0.2 per cent”.
Mortgage broker at Blackburne Mortgage Broking, Paul Prindiville, shared a similar sentiment, also stating the booming market is due to short supply.
“What we’re seeing is a real undersupply of property. The market’s pretty hot because there’s not much supply out there, so supply and demand [together is] causing prices to go up all over the place,” Mr Prindiville said.
CoreLogic’s report found that four in five house and unit markets analysed nationally recorded a rise in values over the past three months to October, with 83.1 per cent of house markets and 80.6 per cent of unit markets recording increases in value.
Head of research at CoreLogic, Eliza Owen, said this broadly reflected the ongoing growth in the Australian housing market, regardless of weakening economic conditions and high interest rates.
“It’s often noted that Australia is not ‘one housing market’ and we’re currently seeing increased diversity in capital city market performance,” Ms Owen said.
“That’s reflected in city-wide growth rates, the various levels of supply that’s available in some cities over others and it’s reflected in the different suburbs we analyse in this report.
“At one end of the spectrum, suburb-level analysis reflects the extraordinary growth trend across cities like Adelaide, Perth and Brisbane.
“In these cities, total listings levels are low, citywide capital growth is running a bit over 1 per cent per month and migration trends from both overseas and interstate favour more housing demand.”
[RELATED: Brokers observe a boom in WA property investment]
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