House prices to grow further in 2023: REIWA market forecast update



House prices are still on track to achieve low to moderate growth in 2023, while unit prices will remain relatively stable, according to REIWA’s 2023 property market quarterly update.  


Rents are also expected to rise further. 


“Perth’s annual median house price has increased 1.5 per cent to $552,000 since the end of 2022,” REIWA CEO Cath Hart said. 


“Resilience has been the theme for 2023 so far, with house prices continuing to grow in the face of 12 interest rate rises. 


“Demand for homes is strong and is supported by population growth. This is expected to continue, with WA recording a 2.3 per cent increase in its population over the year to December 2022 and forecast to grow another 1.8 per cent in 2023-24.” 


It was a different story for the unit market where the annual median price decreased 1.5 per cent from the end of last year to $399,000. 


Building completions and interest rates are wildcards for the market. 


“There are over 20,000 homes under construction at the moment and as they are completed we will see people move out of their current residence and into a new home, freeing up some supply in the sales and rental markets. This is already starting to be seen in the rental market,” Ms Hart said. 


“However, this won’t have a significant negative impact on prices as population growth will offset the increase in supply. In addition, these homes will not all be completed at the same time, so the market will not be flooded by more properties to sell or rent.” 


While the market has shown resilience to interest rate changes, Ms Hart said they had still had some impact. 


“We have certainly seen a decrease in sales activity in the sub-$500,000 price bracket. This is the segment of the market where buyers’ and homeowners’ budgets are more sensitive to the increase in interest rates and cost of living,” she said. 


“Buyers have become more budget conscious and this will increase if additional rate rises reduce their borrowing power further. 


“And while sales activity has decreased at the lower end of the market, it is the cheaper suburbs that are recording the quickest selling times, suggesting affordability is important to buyers who are acting quickly when they spot an opportunity offering good value.” 


Perth sales market 


Properties continued to sell quickly in the second quarter of the year, with June setting a new record median of 10 days on market. 


The number of properties for sale on hit a 13-year low of 5,384 at the end of June. 


“For a couple of months, the number of sales exceeded the number of properties coming to the market, which has seen listings on decline,” Ms Hart said. 


“This started to change towards the end of June with new listings increasing slightly and sales falling below new listings. 


“We expect more properties to come to the market as we move into Spring. However, it will be some time before we return to a traditional balanced market.”