Chief Economist at the Macro Investor Leith van Onselen shared his 12-month price forecasts for Australia’s capital city housing markets based on consideration of key price drivers: housing finance; housing supply; affordability; and the macroeconomic outlook.
Perth: 2% to 5%
Perth’s housing market is likely to be a star performer over the coming year. Although values have declined by 9.5 per cent (houses) and 4.7 per cent (units) since peak, which are above the average decline nationally, fundamentals have improved significantly, which should support price growth of between 2 per cent and 5 per cent over the next 12 months.
Affordability in Perth has improved considerably, with home prices relative to incomes the lowest in the nation, and prices compared with rents below the national average.
Rents are also rising sharply – up by around 16 per cent over the past year according to RP Data – caused by a rental vacancy rate that is the second lowest in the nation and has tightened considerably compared with the same period last year.
The tightening of Perth’s rental market has been driven by the highest population growth in the nation combined with a low rate of dwelling construction. The number of homes for sale is also relatively low, and has fallen by 14 per cent since the same period last year.