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Affordable & Liveable Property Guide 2nd Half 2020 - Perth

Overview

Median house prices in Perth Metro remained steady from 2019 to 20201, sitting at $525,000. During the same timeframe median unit prices slightly softened, by -2.5% to $390,000. By comparison, from 2018 to 2019 median property prices in Perth Metro softened by -2.8% for houses, and by -2.4% for units. Perth Metro’s relative median price stability between 2019 to 2020* is reflective of a resilient market amidst COVID-19.

There is a unique opportunity in Perth Metro, as the current market is more affordable than 5 years ago (median price of $565,000 for houses and of $432,000 for units in 2016).

In the 2nd Half 2020 report, suburbs with declining annual median unit price growth had to be considered. This is consistent with the methodology applied in the 2nd Half 2019¥ report. There were however many more suburbs with positive median price growth in the 2nd Half 2020, signalling a Perth Metro property market turnaround.

Table 1 highlights top suburbs in Perth Metro based on price growth and total estimated value of projects commencing in the 2nd half of 20202.

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Access to Market

The dominant proportion of homes sold in Perth Metro across 20201 were in the premium price bracket of above $700,000 (28.0%). Units recorded a dominant lower price bracket of less than $300,000 (28.0%). There is a balanced spread in the percentage of sales in each price point, particularly for units, which suggest there is a property for every budget in Perth Metro.  

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Affordable & Liveable Suburbs

To identify affordable and liveable suburbs premiums of 22% for houses and -13% for units were added to the Western Australia (WA) average home loan, which were below those required to reach Perth Metro’s median prices (32% for houses and -2% for units). Thus, the affordable and liveable suburbs are below Perth’s median prices, meaning that the suburbs identified within this report are more affordable for buyers.

Considering all methodology criteria (property trends, investment, affordability, development, and liveability), Tables 2 and 3 identify key suburbs that property watchers should be focused on.

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IIn September 2020, house rental yields in Perth Metro were recorded at 3.7%. In the 12 months to Q3 2020, the median house rental price increased by 5.1% to reach $415 per week, while average days on the market declined by -4.4% (to 21 days).

In September 2020, Perth Metro recorded a very low vacancy rate of 0.9%, far below that of Melbourne Metro (3.8%) and Sydney Metro (3.5%). This follows a three-year trend of declining vacancy rates in Perth Metro, in what is perhaps the strongest signal that the market is primed for an investment growth phase.

Methodology

This affordable and liveable property guide for Perth Metro analyses all suburbs within a 20km radius of the Perth CBD. The following criteria were considered:

  • Property trends criteria – all suburbs have a minimum of 20 sales transactions for statistical reliability purposes. Based on market conditions suburbs have either positive, or as close as possible to neutral price growth between 2019 to 20201.
  • Investment criteria – as of September 2020, suburbs considered will have an on-par or higher rental yield than Perth Metro, and an on-par or lower vacancy rate.
  • Affordability criteria – identified affordable and liveable suburbs have a median price below a set threshold. This was determined by adding percentage premiums to the Western Australia (WA) average home loan, which was $397,7933 as of Q2 2020. Premiums of 22% for houses and -13% for units were added, which were below those required to reach Perth Metro’s median prices (32% for houses and -2% for units). This places the suburbs below Perth’s median prices, meaning that the suburbs identified within this report are more affordable for buyers.
  • Development criteria – suburbs identified must have a high total estimated value of future project development for the 2nd half of 20202, as well as a higher proportion of commercial and infrastructure projects. This ensures the suburbs show signs of sustainable economic growth, in turn positively affecting the property market.
  • Liveability criteria – all identified suburbs have low crime rates, availability of amenities within a 5km radius (i.e. schools, green spaces, public transport, shopping centres and health care facilities), and an unemployment rate on-par or lower in comparison to the WA average (as determined by the Department of Jobs and Small Business, June Quarter 2020 release).

PRD Affordable and Liveable Property Guide 2nd Half 2020 - Perth