Rental listings down 30% since May
Property prices declined on average by 0.27% this week. Unfortunately, after prices held firm in the face of rising interest rates for an extended period, Perth has not recorded a weekly price increase for nearly two months. The following chart illustrates that downward pressure on prices is starting to build, recording Perth’s most significant weekly decline for the year.
This week we thought it would be interesting to compare the mortgage growth between WA, NSW, and Victoria. Since 2010, the average mortgage in WA has increased from $367 071 to $469 956, representing a 28% increase. However, the following chart illustrates that most growth has occurred in the last two years. The lack of mortgage growth from 2013 to 2019 makes sense with the decline in Perth property prices following the mining boom’s end.
However, NSW mortgages increased from $392 118 to $761 478, a 94% increase, while Victoria increased from $349 659 to $642 375, an 84% increase. The following chart reveals how the average mortgages between WA and the two most populous states have diverged over the past decade. This divergence means WA currently has average monthly mortgage repayments of $2748 on a 25-year loan at 5% interest, while NSW repayments are $4452 and Victoria’s $3756. The lower mortgage repayments will reduce the impact of increased interest rates on mortgage borrowing constraints and is one of the main reasons we expect WA dwelling prices to fare better than the eastern states.
Weekly sales and listings were again stable this week, with Perth recording 861 transactions and 8307 properties for sale. These figures are very consistent with longer-term averages. The primary concern is rental availability, with listings for rent falling by 6.4% to 1,776. The following chart shows that rental listings have fallen by nearly 30% since the beginning of May, and if that trend continues, rental vacancies will be around 1500 by the end of the year.
WA has a rental crisis, and the situation worsens with a lack of building supply due to labour and material shortages/price increases. As most migrants rent when they first relocate, it will be challenging to attract the skilled workers WA sorely requires if there is no accommodation for them. The WA State Government will be forced to address this issue as the negative impact on WA economically and socially increases.