Perth is moving into a new phase in its property boom, with more and more buyers opting for units as houses become more and more expensive.
The latest sales data shows that the strongest markets in Perth are well-located locations with a major presence of attached dwellings.
While the most popular house markets for home buyers and investors (mostly those at the affordable end of the market) are a little less buoyant than earlier in the Perth up-cycle, the focus is switching to affordable units.
Perth started this boom with a reputation as the most affordable capital city housing market. After a couple of years of stellar price growth, that’s no longer the case. Perth is now well above Hobart and Darwin with its median house price and challenging Adelaide.
Perth now has a median house price around $800,000, but its median unit price is in the low $500,000s, still well below that of Hobart and Adelaide.
The evaporation of affordability in the Perth housing market can be seen is the rise in values in selected suburbs. Armadale, heavily targeted by investors and FHBs, had a median price of $250,000 three years ago and now it’s approaching $500,000. Seaside Rockingham had a median price below $400,000 at the start of 2021 and now its $630,000. Greater Perth has many similar examples.
When the bargain suburbs have medians above $500,000, the big attraction that caused the stampede starts to fade. So now buyers in Perth, increasingly, are looking at unit markets. While many house markets have been frenzied, with listings selling within days and prices rising by 20% or more a year, the unit markets are less competitive and prices have not yet taken off.
The City of Perth provides a case study. The median unit price for East Perth has risen 6% in the past 12 months while the suburb of Perth has increased 9%. Typical units are priced in the mid-$400,000s. Quarterly sales have been 406 490 599, showing a major lift in buyer demand recently.
In the City of South Perth, unit sales in both Como and South Perth are rising strongly, while in Subiaco quarterly unit sales have been trending higher for the past 12 months – the median unit price is heading towards $600,000, but that’s a third of the price of typical Subiaco houses. There’s a similar pattern in Victoria Park, where the median unit price has risen 11% but remains low at $400,000.
Upmarket Mosman Park provides a startling contrast between its house and unit markets: there have been identical sales numbers in the past year, but the median prices are $2 million for houses and $380,000 for units. Perhaps not surprisingly, sales volumes for units are rising strongly, but prices haven’t moved much as yet.
There are many other examples in the Perth market, which is now following patterns seen in other cities in the trend we call the Rise and Rise of Apartments.
