Perth house price growth set to beat other Australian cities in 2021!

Perth house prices are on track to rise faster than any other Australian capital city in 2021, thanks to a strong economy, a tight rental market and the state’s response to COVID-19, according to property experts.

House price growth between 6 and 10 per cent was likely, Real Estate Institute of WA president Damian Collins said, with 2021 expected to be the city’s best performing market in about seven years.

“We have an undersupply of properties on the market and the oversupply of what we had in the last year has been taken up and demand is certainly outstripping supply,” he said.

“We are certainly very affordable. Our income is higher than other locations, interest rates are low, and the WA economy is strong, particularly our mining sector, which drives a lot of things.”

Economists also expect strong growth, with ANZ tipping a 12 per cent rise in Perth housing prices this year, compared to 8.8 per cent in Sydney, 9.5 per cent in Brisbane and 7.8 per cent in Melbourne.

AMP Capital chief economist Shane Oliver recently forecast Sydney and Melbourne to rise about 2 per cent on average in 2021 and more for suburban houses, while Perth and Brisbane could rise to 10 per cent.

Perth’s median house price was the cheapest of any capital city at $534,336 in the September quarter, on Domain figures. The median unit price of $335,869 was more expensive than only Adelaide and Darwin.

Fairly significant net migration, both international and national, because of COVID-19, was also set to drive price growth.

Conditions were ripe for an “extraordinary” year for the market in 2021 and were the result of several factors, Bankwest Curtin Economic Centre director and Professor Alan Duncan said.

“We know that the Perth market has been relatively protected from COVID-19 and so that’s generated a degree of confidence that’s perhaps not mirrored in other state jurisdictions,” he said.

“We are coming off the back of fairly consistent declines in housing price, there is potentially good value to be had there.

“Of course, because of the protection with COVID- 19 there is continued strength being delivered in industry sectors, such as mining and the building bonus the WA government introduced, and that’s been a real stimulus – the volume of house sales is up 45 per cent up on same time last year.”

But Professor Duncan said Perth was a tale of two markets.

“In terms of the sales, there is real activity going on and there is a sense of, it’s turned a corner with increases in prices given the high demand but on the rental side it’s a very different story with rents being up and the vacancy rate extraordinary low.”

Perth house rents rose 13.5 per cent over 2020 and unit rents were up 12.9 per cent, the latest Domain Rent Report shows, the strongest annual growth in the nation.

Urban Development Institute of WA chief executive Tanya Steinbeck said Perth’s extremely tight rental market due to a lack of residential supply was likely to have an impact on the market in 2021, driving demand from investors and owner occupiers alike.

“While there are many unknowns, we would expect unit prices to increase in Perth given the demand that is likely to be spurred by the low rental vacancy rate,” she said.

“We would expect investors to look to this market as an opportunity to boost rental supply.”

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