Perth’s property market has demonstrated remarkable growth over the last 18 months, culminating in the most significant turnaround in profitability among all capitals over the past five years.
According to CoreLogic’s Pain & Gain report for the September 2024 quarter, 96.9% of all resales completed during that period made a profit. This was up from 56.4% five years earlier in the September 2019 quarter.
Perth also saw the second-largest increase in the rate of profitability over the September 2024 quarter, up approximately 120 basis points. This was second only to Canberra’s 170 basis point increase.
Reasons for Perth’s impressive performance
This growth in profit-making sales is largely attributed to the city’s rapid increase in dwelling values, which means sales taking place more recently have benefited from homes selling for higher prices.
Over 2024, Perth’s median dwelling value rose 19.1% according to CoreLogic. This was by far the fasting-growing city, with Adelaide second on the list at 13.1%.
So what has caused the city’s home prices to climb?
- Relative affordability
Compared to other capitals, Perth is more affordable. Even with last year’s growth, the city is still cheaper than Sydney, Melbourne, Canberra, Brisbane and Adelaide. This makes it a good option for both investors and owner-occupiers looking for a more affordable property in a capital city.
- Strong economic conditions
Western Australia’s robust economy, driven largely by the resources sector, has supported price growth in the property market.
- Population growth
The strong economy has also encouraged higher levels of both interstate and overseas migration. This has meant WA is the fastest-growing state, which has put demand on the housing sector.
- Limited housing supply
A shortage of both new and existing properties has further unbalanced the housing market. With demand outweighing supply, property prices have risen.
Suburbs seeing significant change
Of the 31 suburbs examined by CoreLogic, five saw 100% of all September quarter 2024 resales make a profit: Kalamunda, Mosman Park, Nedlands, Perth and South Perth.
Kalamunda was a stand-out suburb. Not only did it grow from 97.9% of all sales making a profit in the June 2024 quarter to 100% in September, but the amount of profit grew from a median of $310,000 to $350,000 – a $40,000 increase over three months.
East Freemantle saw profits soar, rising from a median of $136,500 in the June quarter to a whopping $664,000 in September – by far the largest growth suburb in the city.
Median hold periods varied across the city, with many becoming shorter between June and September. Generally, hold periods dropped by one to two years, though Cottesloe was an outlier, with the median hold period almost halving from 20.3 years to 10.9.
Benefits for owner-occupiers and investors
The sharp increase in profit-making resales offers significant advantages to both owner-occupiers and investors.
For owner-occupiers, the prospect of strong capital growth improves financial security and provides opportunities to tap into equity to upsize, renovate or buy an investment property.
Investors benefit from both capital growth and strong rental yields. The high population growth supports rental demand. This ensures consistent rental income while rising property values increase an investment’s overall worth.
Interested in buying a property in Perth? As an expert Perth buyer’s agent, Resolve Property Solutions can help. To discuss your options, book a free discovery call with a Resolve Buyers Agent.