Perth's property market has seen a remarkable surge, with many classic suburban areas now commanding median house prices of $1 million or more. According to data from real estate analytical firm Cotality, 197 out of 400 suburbs in Perth and Peel have reached this milestone, while eight suburbs have achieved a median unit price of $1 million.
New Entries to the Million-Dollar Club
Surprising new additions to the million-dollar house club, with median prices between $1 million and $1.15 million, include many areas regarded as classic suburbia that were predominantly developed between the 1950s and 1990s. These suburbs include Wanneroo, Heathridge, Craigie, Morley, Yangebup, Coolbellup, Kewdale, Parkwood, South Lake, Alexander Heights, Kiara, Ballajura, Redcliffe, Ferndale, Marangaroo, Eden Hill, Beldon, Belmont, Balcatta, Spearwood, Joondalup, and Wilson.
Several newer master-planned suburbs have also joined the club, including Wandi, Jane Brook, Sinagra, Forrestdale, Singleton, Ashby, Pearsall, Piara Waters, Beeliar, Carramar, and Tapping.
Property Market Valued Over $1 Trillion
The increase in property values has resulted in Western Australia's property market now being valued in excess of $1 trillion. This sum is greater than the combined capital value of the four major banks in Australia, which have facilitated lending to accelerate this growth. Small percentage movements in price now create or destroy large sums of money. A ten per cent rise in values generates $100 billion in wealth for West Australians, while a similar movement down takes it away, making house price movements crucial for the WA economy.
Rise in Million-Dollar Sales
Cotality data reveals that by the end of last year, more than one in three houses (33.9 per cent) and more than one in ten apartments or units (10.9 per cent) sold for $1 million or more. This is a significant increase from 2021, when only 12.9 per cent of houses and 4.4 per cent of apartments or units reached that threshold. Over the past five years, median house prices have grown by 92.9 per cent, and unit prices by 87.71 per cent.
What $1 Million Buys Now vs. Five Years Ago
The astonishing march of property prices is highlighted by what $1 million could purchase five years apart. In 2021, the seven-figure sum could buy a fully renovated three-bedroom, two-bathroom Federation home in Mt Lawley or a five-bedroom family home in North Perth, both on average-sized blocks in quiet streets. Alternatively, it was enough to purchase a modern, double-storey, four-bedroom, two-bathroom home in Doubleview on a green-title block with ocean and city views from the balcony.
Today, $1 million buys an unrenovated 1970s home on a 770sqm block in Balga, or a fairly newly built home on a 310sqm survey strata block. It can also purchase a fairly standard four-bedroom, two-bathroom home in Yanchep or a 66sqm unit, or a four-bedroom, two-bathroom home on a 680sqm block in Beckenham backing onto Roe Highway. The sum does not go far in inner-city or coastal suburbs. Earlier this year, a 70s-built, unrenovated two-bedroom unit fronting busy Scarborough Beach Rd sold for $972,000.
Mixed Predictions for Perth's Property Prices
Analysts are divided over predictions for Perth's property prices, with some forecasting growth and others claiming prices will fall by as much as eight per cent. Property expert Gavin Hegney expects prices will fall, citing rising interest rates as the biggest dampener on the market. He notes that traditionally, buyers are unperturbed by two rate increases, start to worry at the third, and panic at four. He expects this impact to be compounded by tax changes that may drive away many investors. Hegney predicts prices will start falling within months or early next year, but the drop will be relatively short-lived, with prices likely to pick up again in three years. He also expects that reduced rental properties from Budget changes will drive up rental prices, eventually drawing investors back into the market.
HSBC chief economist Paul Bloxham expects prices to fall by 4 to 8 per cent in 2027, shaving $40,000 to $80,000 from median values. He attributes this to an anticipated exodus of investors from the Perth market, which has been largely underpinned by east coast investors. Loan data shows investors now comprise 40 per cent of purchases, compared to only 15 per cent about four years ago. Bloxham also notes that an anticipated economic downturn across the country next year will drag on prices.
However, president of the Real Estate Institute of WA Suzanne Brown does not expect a downturn. She states that if nothing changes with supply and demand, moderate property price growth should continue. Should demand ease and supply increase meaningfully, price growth will slow. The State Government expects population growth to slow slightly over the next few years, adjusting the demand and supply equation. Brown adds that unless there is a significant change in the economy and market conditions, a downturn is not expected. In the rental market, the impact of the Federal Government Budget's taxation policy changes is likely to reduce rental supply, putting more upward pressure on rents.
