With soaring inflation and the looming series of interest rate hikes by the RBA, most of Australia is preparing to retreat except for one capital city, Perth, sailing against the wind.
While the East Coast faces downsizing looms, Perth property prices hit record highs. Surprisingly, after almost eight years of decline and recovery, the median dwelling values for Perth have recently hit a new record high of $552,128.
Since June 2020, Perth’s dwelling values have climbed a stratospheric 24.5 per cent, eclipsing the previous record set in June 2014. This includes both houses and apartments. It took 94 months for Perth to stage a recovery in property prices.
Led by the growth in houses with unit values, the Perth dwelling market is still -13.6 per cent below the record high seen in September 2013. The median dwelling value in April 2022 was $9,010 higher than the median value eight years ago.
The top reasons for growth in the home values of Perth are:
A recovery in mining activity
A sub-4 per cent unemployment rate
Strong jobs growth
Positive interstate migration
Predictions and trends showed that the housing market values were easing by the end of 2021 but interestingly, the trend rate of growth has seen a resurgence from March 2022 quarter.
Perth is an attractive and lucrative option because it is the second-lowest dwelling value of any capital city that attracts buyers looking for affordability. During a brief period between 2006 to 2008, Perth had the highest median dwelling value among all the capital cities. This relatively healthy affordability position comes again in 2022.
Despite its vast geographic distance from the nation's east coast, Perth is not immune to the same economic conditions that threaten to walk back much of the gains made in the housing market last year.
While Perth's dwelling market indicates a continued upswing, several factors like the recent tightening of interest rates may have a direct impact on the housing demand.
Just as the record low-interest rates aided recent recovery, the recent interest hikes will eventually make Perth follow other Australian markets into a broad-based downswing.
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