Perth house prices tipped to reach ‘line in the sand’ milestone before year’s end

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Perth’s property market is all but guaranteed to reach a “line in the sand” milestone before the end of the year, with new figures showing the median price for a home in the metropolitan region is within $20,000 of the $1 million mark.

According to the latest data from the Domain House Price Report for the September quarter, Perth prices climbed 1.6 per cent ($15,382) over the three-month period to a record median of $981,259.

Domain chief of research and economics Dr Nicola Powell said the latest growth has Perth’s real estate market sitting just $18,741 (1.9 per cent) below a median price of $1 million and is likely to reach this before the year’s end.

“My observation is when I see capital cities breach that million-dollar median for house price it really is a line in the sand and it is such a milestone for the housing market,” she said.

“I think particularly for a market like Perth which has always had this power of affordability, it makes you wonder if you can really say that when you have a median house price ever-so close to a million dollars.

“Our expectation is that it is going to reach that million-dollar mark before the end of the year.”

However, quarterly growth for houses is now only one-third of the previous quarter’s and has declined by roughly one-third of the pace compared to the same quarter last year. As a result, annual gains have eased to 10 per cent ($89,468) – the slowest in more than two years.

Powell said Perth’s market would need an increase of only 1.9 per cent over the next quarter for the median house price to reach the million-dollar milestone.

“We are of the expectation that the RBA are going to deliver a rate cut by November, and then you have got the expansion of the Home Guarantee Scheme,” she said.

“That expansion is really going to steer demand toward the more affordable sector of Perth’s housing market, under that property price cap.

“That expansion of the home guarantee scheme has created a demand trigger, so while we are expecting prices to slow, even if we see similar rates of growth as we have seen this quarter we are going to get to $1 million.”

The new data comes a day after property analysts Cotality revealed 19 more Perth suburbs had been added to the “million-dollar club”.

New entrants this month included Bayswater, Maylands, Noranda, Landsdale and Padbury.

The number of regional areas above $1 million doubled from six to 12, with Yallingup cracking a $2 million median.

Cotality economist Kaytlin Ezzy said concerns regarding affordability and equality would only intensify, especially for first home buyers, as more suburbs crossed the million-dollar threshold.

Despite indications of a slowdown in the WA housing market, the latest Domain statistics show continual growth, especially in the demand for units.

“This is the 12th consecutive quarter of growth that we have seen for Perth house prices which is the longest consecutive run of gains since that 2000 to 2007 period for price growth,” Powell said.

“It is the same with unit prices. It is the 10th consecutive gain for unit prices and again the longest run since the period between 2000 and 2007.”

According to the latest data, Perth unit prices rose 4 per cent ($21,351) over the quarter to a record median of $560,471, slightly accelerating from the previous quarter.

Powell said affordability had been a significant factor in the latest trend towards units and apartment sales.

“I think what we are seeing for Perth is that there has been such change in affordability over the past five years. Now there are so many first home buyers who are priced out of a house so they are looking towards units,” she said.

“Investors have obviously been a big player in WA’s housing market. We have seen investment activity edge well above the decade average. Investors tend to go towards units and apartments – they’re higher yielding.”

Median house prices in regional WA, which has seen its 13th consecutive quarter of growth, are at $620,000.

“The South West is popular for tree-changers, lifestyle seekers and retirees as well,” Powell said.

“Particularly when you factor in the price change that we have seen coming out of Perth, that does allow equity-rich homeowners to realise their retirement dreams and perhaps move to one of these hot spots.”