Article by: Tess Ingram, Journalist
Source: WA Today
April 12, 2021
House prices in Western Australia are predicted to increase 15 per cent this year after strong demand fuelled greater than expected gains in the three months to March.
The Real Estate Institute of WA is forecasting a 15 per cent surge in house prices in 2021, upgrading its November forecast of a 10 per cent increase over the year.
The revision from the state’s peak real estate body comes after ANZ hiked its Perth house price growth forecast to 19 per cent for 2021. This is higher than the bank’s expected 17 per cent jump in house prices nationally, which it upgraded in March from an earlier forecast of just 9 per cent.
ANZ’s forecast is one of the most bullish among the banks, exceeding Commonwealth Bank’s predicted 8 per cent rise nationally this year.
The strong forecasts are driven by the greater than expected price growth recorded over the first three months of the year.
Perth’s house prices rose 5 per cent to an average median value of $505,000, in the three months to March, according to CoreLogic data.
Dwelling values rose 8.2 per cent from a July 2020 low, when the median house price was $455,425.
Dwelling values jumped 1.8 per cent in March alone, which CoreLogic research director Tim Lawless said was the fastest rate of appreciation recorded since September 2006.
“Such a rapid pace of growth is seeing the market rapidly recover from the 22 per cent peak-to-trough fall that ran between mid-2014 and mid-2019, followed by a 2.2 per cent drop through COVID,” Mr Lawless said.
“Local housing values are still 15.9 per cent below peak levels, highlighting the relative affordability of the market.”
That peak was recorded in June 2014 when the median house price was $564,172.
Mr Lawless said the heat in the market was evident in home sales estimates for the March quarter, which were up 42 per cent on last year’s numbers.
REIWA president Damian Collins said affordable house prices, an increase in consumer confidence, low interest rates and a shortage of stock for sale were contributing to the price growth.
REIWA’s data for March showed properties were selling at the fastest rate they had in 15 years.
The average time to sell a property in Perth during March was 17 days, the lowest it has been since 2006.
“We hit the bottom of the market around June last year following the COVID-19 lockdown and since then consumer confidence has returned,” Mr Collins said.
“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.
“There is also a fundamental imbalance between supply and demand in the sales market right now, with more buyers looking for property than there are houses listed for sale.”
Mr Collins said those factors created a “perfect storm” for higher-than-expected house price growth this year, tipping prices to continue to rise until supply catches up with demand.
However, both ANZ and CoreLogic are suggesting price growth will slow in the second half of 2021.
While record low interest rates are expected to remain for years, housing affordability issues, a decline in fiscal stimulus and the possibility of tighter lending policies could all have an effect later in the year.