Perth homes jump nearly $6000 a week, but experts warn price growth is finally set to slow

Perth homes prices grew a record $69,000 over three months — or $5750 every week — with new Cotality data showing the median dwelling price has crashed through the $1 million barrier for the first time.

Cotality economist Tim Lawless said Perth’s median price for both houses and units, now at $1,017,698, after 7.3 per cent growth over the quarter, was unlikely to continue growing at the same rate.

Mr Lawless said prices would continue rising, but he predicted strong headwinds would start to slow the speed of price growth.

“We are starting to see some signs that demand and supply are starting to converge,” he said.

“(Perth) has hit an affordability peak, and there has been a pick-up in buildings approvals, although that has not quite translated into completions yet.”

He said insurance and energy costs, as well as rising interest rates — with potentially three more cash rate hikes due this year — had affected demand.

While there was no evidence the Middle East conflict had affected prices in Perth, falls in the Melbourne and Sydney markets indicated broader pressures on the market.

A separate report from PropTrack economist Eleanor Creagh said Perth dwelling prices had hit a milestone peak in March at $1,012,000, following a 20.9 per cent increase year on year. It was equal to a $203,300 price rise — the biggest dollar value increase in the country.

PropTrack said regional WA homes were up 15.9 per cent year on year.

Ms Creagh said a prolonged conflict in the Middle East and more interest rate increases could see Perth prices flatten or fall, though she said it was too difficult to forecast geopolitical events.

But she said market trends were showing clear signs that price growth was slowing. Already, three quarters of all Australia SA4 areas — geographical corridors containing up to 500,000 each — are experiencing decelerating growth.

The Real Estate Institute of WA said there were signs of pressure in the rental market, with 1870 properties available for rent on its website at the end of March, which was 0.4 per cent lower than February and 11.1 per cent lower than the same time last year.

Deputy president Rob Mandanici warned that increasing construction costs, as a result of the Middle East conflict, as well as potential changes to capital gains tax, could affect the supply of rentals.

House rents were already rising, up 6.5 per cent over the year to $740, while unit rents were up 6.9 per cent over the year to $695.

“Rising oil prices are already putting upward pressure on building costs and are also causing delays in the supply of materials,” Mr Mandanici said.

“COVID showed us what can happen when there are serious challenges in the building industry — more people look to the established market for homes to buy or rent.

“This increases demand and puts upward pressure on prices. The effect is magnified when there are supply constraints in the established market.”