Comparisons to Melbourne may be unfair but Perth property boom is real

Property’s league ladder has undergone a major shake-up, with Perth and Adelaide overtaking Melbourne’s median dwelling value.

But like the leagues of our national football codes, the playing fields are not necessarily even.

In Perth’s case, the leading suburb for capital growth in August was Willeton’s 5.6 per cent. In one month, a suburb with a median value now at $1,125,000 has delivered a serious thrashing to what Melbourne’s fastest growing region delivered in a year.

Melbourne City (an SA3 region that incorporates several suburbs) rose 3.6 per cent over the course of a whole year.

There’s more below on the suburbs in Perth that are still booming with ladder-topping growth rates comfortably outstripping that of any opponents.

There’s no doubt that Melbourne’s flatlining property market, with a median price among capital cities now above only Hobart and Darwin, is failing to deliver home owners or investors any rewards.

This is great news, of course, for those trying to save for a deposit to get on the property ladder and eschew the rental market and all the uncertainty that comes with living in someone else’s property.

Are the property city rankings all they appear to be?

At the onset of Covid in March 2020, Sydney had the highest median dwelling value, followed by Melbourne, the ACT and Brisbane. Perth was ranked 7th in terms of median dwelling value, after Darwin with the lowest median, and Adelaide.

Fast forward to August 2024, and Melbourne’s median dwelling value, at $776,000 is ranked sixth lowest across the eight capital cities, after Darwin ($504,000) and Hobart ($655,000). The difference between Sydney and Melbourne’s median dwelling value is now 52.1 per cent, according to CoreLogic, the largest differential between Australia’s two largest capitals since June 1999.

Tim Lawless, Research Director Asia Pacific at CoreLogic, said property prices around the country had been shaped by shifting demographics, housing supply, affordability pressures and, perhaps most tellingly in this comparison, the composition of housing.

Much of Perth and Adelaide’s booming property market can be attributed to one of their biggest collective failures.

“Over the past fifteen years, the composition of Perth dwellings moved from 13 per cent within the multi-unit sector to 16 per cent,” Mr Lawless said.

“Similarly, Adelaide moved from 14 per cent to 16 per cent.

“Over the same time frame, Melbourne’s multi-unit sector has increased from 23 per cent of all housing to 33 per cent and Sydney has increased from 31 per cent to 39 per cent.”

Melbourne’s relative success at providing more housing in increasingly densified suburbs helps limit urban sprawl, provides affordable housing to key workers closer to their inner suburban workplaces, and in turn reduces pressure on outer suburban prices whereby first home buyers have less competition in these areas.

“The (price) difference comes back to the composition of dwellings and the fact that Melbourne has densified more substantially and rapidly than the mid-sized capitals,” Mr Lawless said.

In August, CoreLogic estimates a third of housing stock in Melbourne falls within the multi-unit sector, compared with 25 per cent in Brisbane and 16 per cent of housing stock in Adelaide and Perth.

“Considering unit values are generally much lower than house values, the higher portion of multi-unit dwellings in Melbourne tends to weigh the median dwelling value down relative to cities with a skew towards lower density styles of housing.”

Housing supply is at crisis shortage levels around the country, driving property prices through the roof.

But Melbourne’s failure to deliver capital growth is also a product of its success in delivering far more dwelling completions than any other state or territory in the past decade.

Underscoring the impact of dwelling completions on price, Canberra has slipped from the second highest median property price to third, with Adelaide and Perth on track to eclipse it in the not distant future.

But like Melbourne, a profusion of unit completions hitting the market has eased the housing crisis there somewhat even as the headlines point to its imminent fall down the price rankings ladder.

Perth’s ongoing property boom

Whatever the factors influencing such city-to-city property market comparisons, Perth’s increasingly incredible surge is real and ongoing.

The past five years has seen national dwelling values rise by 47.9 per cent, but with extreme diversity from city to city. Perth has led the pace of gains with a stunning 76.4 per cent rise in values since August 2019, Brisbane values are up 71.5 per cent and Adelaide has surged by 70.8 per cent. At the other end of the spectrum is Melbourne where values are up ‘only’ 19.8 per cent and Sydney values have risen by 43.1 per cent.

Perth’s median property price when placed against Melbourne’s may be skewed by the latter’s preponderance of lower priced units but the Perth boom is all too real.

House and unit prices continue to soar by the month.

Perth’s median house sale price continues to rise, increasing 1.9 per cent in August and 20.7 per cent over the past year to reach $688,000. 

The median unit sale price set a new record, rising 1.1 per cent over the month to $455,000 which is 13.8 per cent higher year-on-year, according to the Real Estate Institute of Western Australia (REIWA).

Cath Hart, CEO, REIWA, said it was bad news for those waiting for a fall before buying in Perth.

“The market was experiencing extraordinary conditions, with no signs of easing in the short term.

“At the moment there is clearly the appetite for, and ability to, buy property and it will take a significant change in demand or supply to ease the pressure in the established homes market,” she said.

“Members are still reporting strong numbers at home opens and they continue to receive multiple offers over the asking price, with some offers well above it.”

Suburbs with the most house price growth in August were Willetton (up 5.6 per cent to $1,125,000), Westminster (up 4.2 per cent to $565,000), Mindarie (up 4.0 per cent to $1,050,000), Thornlie (up 3.1 per cent to $630,000) and Armadale (up 2.7 per cent to $488,000).

Duncraig, Lakelands, Falcon, Hocking and Swan View were also among the top performers, recording growth of 2.5 per cent or more over the month. 

Low listings may be showing signs of a turnaround but are still massively below that of a balanced market.

Active listings settled at 3,499 at the end of August. This was 9.4 per cent higher than July but still 32.5 per cent lower than a year ago.

Houses and units sold in a median of nine days in August, unchanged from July but one day faster than a year ago.

According to REIWA data, the fastest selling suburbs for houses were Parmelia (three days); Clarkson, Rockingham, Spearwood, and Yangebup (five days); and Cooloongup, Thornlie, Atwell, Greenfields, and High Wycombe (six days). 

Whichever ways the numbers are crunched, or the reasons attributed, the Perth property juggernaut continues to be unchallenged by rivals.