REIWA’s 2023 property market quarterly update estimates Perth house prices will remain steady in the first half of 2023, while rent prices will continue to increase. “Perth’s median house price increased marginally in the first quarter of the year, rising 0.9 per cent from $540,000 at the end of 2022 to $545,000 at the end of March,” REIWA CEO Cath Hart said. If you are an investor then the prospects for capital growth are stronger in the West than the East coast.
The local market has shown remarkable resilience in the face of 11 interest rates rises, backed by strong demand and affordable prices. It is expected that prices will continue to hold firm in the next quarter even if there are one or two more rate rises. However, should we see a period of interest rate stability or even cuts, we would expect to see consumer confidence rise, boosting activity and prices. Low price growth is still a strong possibility across the remainder of 2023.
It is a different story in the rental market, with prices up 5.8 per cent since the end of 2022. “This has been fuelled by declining supply and increasing demand and more rent price increases are expected this year,” Ms Hart said.
Perth sales market
Properties continued to sell quickly in the first quarter of 2023, with good numbers at home opens and many properties still receiving multiple offers. Homes sold in a median 13 days in March,” Ms Hart said. The number of listings for sale hit a twelve year low of 6,931 at the end of December 2022 and we have seen the number of properties for sale drop even lower than that recently.
Properties are still coming to the market at good numbers, and at levels higher than pre-COVID, so the low number of listings on www.reiwa.com is more a reflection of the speed of sales, rather than a lack of properties.
Demand for housing in WA is expected to stay relatively strong, supported by population growth. WA’s population grew 1.8 per cent in the year to September 2022 and the State Government’s recent Mid-Year Budget review forecast further growth of 1.5 per cent in 2022/23 and again in 2023/24.
As more people arrive in WA, this will maintain the demand for housing and keep listings low. And with such tight rental conditions, more people will look to buy rather than rent. Long-awaited building completions remain a wild card for both sales and rental markets. As more COVID building-incentive new homes are completed, there may be an easing in both markets, but this will be offset by population growth according to the REIWA.
New home approvals have also been falling, so this will also affect housing supply in the future, which will result in increases in prices.
Perth rental market
2023 has already proved to be challenging for tenants. The vacancy rate was 0.7 per cent in January, February and March. Homes are leasing in a median 14 days and property managers are still seeing queues at home opens and receiving multiple applications. Declining supply and increasing demand are at the heart of the issues the rental market is facing. Property investors are not entering the market in the post COVID era with 800 fewer rental properties available now than at the start of the year and a decline of 19,200 since January 2021. Although there is interest from Eastern State investors who see value in the WA market, it hasn’t been enough to replace the properties that have been lost.
The proposed changes to the Residential Tenancies Act (RTA), and calls for other reforms such as rent capping and limiting when increases can take place, remain a concern for the remainder of 2023.
According to the REIWA, he vast majority of rental stock in WA is owned by small, private investors and they are listening to the debate over rental reform in various states and they’re nervous about some of the changes being considered.
There are already significant pulls to exit the WA market with 10 interest rate rises, a bulk of mortgages set to switch from fixed to variable-rates this year and a broad recovery in WA home values post-COVID.
Regional WA
Market conditions across regional WA are expected to remain strong in 2023. All regional centres saw median price growth in 2022 although, like Perth, the rate of growth has been slowing. Regional centres are also experiencing low vacancy rates and rising rent prices and this will continue. Regional centres will also benefit from population growth. It won’t just be Perth that feels the effects of population growth, particularly interstate and overseas immigration,” Ms Hart said. Some migrants will move to the regions, which will support these property markets as well.
WA Rental Reforms – What this means for Landlords and Tenants
With the announcement of reforms to the Residential Tenancies Act 1987 last week, there are plenty of questions about what the reforms will mean in practice, how they will be implemented, and when. We have compiled a summary of the reforms and the most Frequently Asked Questions.
What is the Residential Tenancies Act?
The Residential Tenancies Act 1987 (or RTA) is the law that outlines the rights and responsibilities of tenants and landlords in Western Australia, as well as providing the process for settling disputes.
Why is the RTA important now?
Delays in new home building completions caused by labour and material constraints over the past couple of years have meant the supply of housing has just not kept up with demand. Perth’s vacancy rate is currently sitting at 0.7% making it incredibly difficult for tenants to find a home. For owners, soaring interest rates and invasive regulatory changes are causing them to leave the rental property market, with more than 19,200 rentals lost across WA since January 2021. By contrast, more than 70,000 people have chosen to make WA their home since then.
It’s been more than 10 years since the State’s rental laws have been reviewed and a lot has changed. After a three-year review, the State Government has announced an update to the RTA that if feels will balance the demands of both renters and landlords in a challenging environment by providing greater flexibility for prospective tenants, as well as investor certainty and ownership control.
What has the State Government announced?
After much consideration, the State Government has announced the following proposed changes to the RTA:
- no changes to no – grounds terminations
- prohibiting the practice of rent bidding, with landlords and property managers unable to pressure or encourage tenants to offer more than the advertised rent
- reducing the frequency of rent increases to once every 12 months
- tenants will be allowed to keep a pet or pets in a rental premises in most cases
- tenants will be able to make certain minor modifications to the rental premises and the landlord will only be able to refuse consent on certain grounds
- the release of security bonds at the end of a tenancy will be streamlined, allowing tenants and investors to apply separately regarding how bond payments are to be disbursed
- disputes over bond payments, as well as disagreements about pets and minor modifications will be referred to the Commissioner for Consumer Protection for determination
What do these changes mean for me?
The State Government believes a balance has been struck between the need for reform and the need to incentivise investment that builds rental supply in Western Australia. For both renters and prospective renters, these changes will allow for a more modern lease, with more freedom and flexibility to choose how they can turn a house into a home.
For investors, these changes will not unduly impact the rights of the property owner. These proposals will also draw a line under tenancy reform in Western Australia, which will encourage certainty for investors currently in the market, as well as prospective investors.
Source: REIWA
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