Perth Growth Number 1 Nationally
This week we will be focusing exclusively on the latest real estate data reviewing rental listings, sales, listings and Corelogic’s November home value index for Perth and the other capital cities.
Rental listings remained steady at 2,875 this week and have been around this mark for a couple of months. However, with the vacancy rate still less than 1%, Perth rents have increased from $370/week in the June quarter to $390/week for the September quarter. With the vacancy rate well below REIWA’s 3% equilibrium, these rent increases are forecast to continue.
Weekly sales surged to 1042 with the 19% increase fueled by a 21% increase in house and unit sales and an 8% increase in vacant land sales. This is only the third time this year Perth recorded over 1000 sales for the week, the other two occasions were back in June and July of this year.
Listings declined by 1% to 10,108, making this the lowest level of listings for a number of years. As the market continues to tighten with strong sales and declining listings, it is taking significantly less time for properties to sell. Perth recorded 22 days on the market for November compared to 39 days this time last year.
We have written in previous newsletters Michael Keil, with 30 years experience in the real estate industry, believes 12,000 listings is a reasonable equilibrium between buyers and sellers. The graph below shows the steady decline in listings over the past 18 months and the red line is Michael’s equilibrium. As the number of listings continues to decline further below the 12,000 equilibrium coinciding with increasing prices, it makes Michael’s assessment of the market very intuitive.
Corelogic’s latest data confirmed these indications as Perth continued to post increasing price rises. The graph below shows Perth’s property market building momentum. We recently wrote that ANZ’s forecast of a 12% increase in Perth’s property prices over the next year seemed optimistic. However a 1.14% increase for November puts the ANZ forecast on target. This will be great to follow over the remaining 11 months and hopefully ANZ have got it right.
Nationally property prices increased in every capital city with the smaller cities outperforming the larger cities. Perth’s 1.1% growth is significantly higher than the combined capital city growth of 0.7%. Furthermore, Perth recorded a 1.9% increase for the quarter compared to 0.7% for the combined capital cities.
To finish this week we would like to note the decision by the NSW government to start a public consultation process with the view to replacing upfront stamp duty with a broad based tax that is paid over time. REIWA has been lobbying the WA state government to start a similar consultation process however at this stage the government has refused. NSW has forecast huge benefits to their economy with an $11 billion potential injection over the first four years. Transaction costs associated with the purchase of a home are a significant impediment to mobility that leads to adverse effects on the economy.