Heading into 2024, the Western Australian economy is getting stronger by the day, and it's putting us in a great position to handle whatever challenges may come our way. When you look at the bigger picture, it's clear that WA is doing better than most of the country and even the world. Let’s take a look at the 2024 property landscape in WA and discover what it means for you.

Housing Market Dynamics

One noticeable trend in our real estate market is the low number of homes available for sale in Perth. From a peak of over 7,000 listings in early 2023 to a mere 3,700 by year's end, it's a stark reminder of the high demand and low supply defining our market. To put this into perspective, a balanced market in Perth usually has around 13,500 listings which is something to keep in mind as you navigate the market. The rental scene echoes this trend, with listings for rent hovering at near-record lows throughout 2023. In a balanced market in WA, we'd expect about 6,000 rental properties available – starkly different from the 1,600 to 2,200 we've seen. It's clear – we're in the midst of a rental crisis.

The Quick Turnaround of Perth Properties

One of the most remarkable aspects of Perth's real estate market has been the rapid pace of sales. Throughout most of 2023, we've seen homes getting sold in less than two weeks on average.This quick turnover is a testament to the strong demand and competitive nature of our market. Particularly in the western suburbs, it's clear that homes that are either newly built or require minimal work are flying out the door.

The Affordability Advantage

Good news for Perth homeowners and prospective buyers: our real estate market stands out for its affordability. Families here typically spend just 35% of their income on mortgage payments, which is quite a relief compared to the situation in New South Wales, Victoria, and Queensland. This affordability, coupled with our 2.8% population growth rate – the highest in the country – signals a thriving and expanding community. In particular, suburbs like Cottesloe, known for its beautiful coastal location and significant property value growth, offer an exceptional opportunity when compared to other renowned Australian beachside suburbs.

Construction Challenges

2023 was a little challenging for construction with dwelling approvals, starts, and completions dipping to near-record lows. That said, we've still seen the addition of roughly 14,000 new homes each year for the last three years. However, it's important to note that the number of households has increased by about 60,000 in the same period, highlighting a significant supply-demand imbalance in our housing sector.

Navigating Economic Challenges

As we look ahead, it's important to look at the broader economic landscape. Rising living costs and inflation could make it tougher for people to save money and meet their mortgage payments. The recent increase in interest rates has already begun to affect consumer sentiment and borrowing capacities. Some homeowners might need to consider selling if servicing their loans becomes too expensive to keep up with. But it's worth mentioning that this isn't a one-size-fits-all situation. In the western suburbs, for example, the impact might be milder because of the higher-income families who reside here, who are generally less impacted by these types of economic fluctuations.

Investor Sentiment

The potential for an economic downturn and the current global tensions have led to a growing sense of caution in the investment world. Now, more than ever, it's wise to look ahead with a strategic mindset and if you’re looking to invest, consider a more conservative investment strategy to avoid the risks associated with market fluctuations.

Perth's Market Performance

Despite these challenges, Perth's residential market has exceeded expectations in 2023. With house prices growing by 5.7% and rental prices jumping by 19.8% in the year leading up to September 2023, the market has exceeded expectations. As we move into 2024, the demand for housing shows no signs of slowing down, with property experts anticipating that this growth could even surpass the growth we experienced throughout 2023. It’s also looking like the rental market is set to see significant growth, likely surpassing the earlier forecast range of 5-10%.

All things considered, we're confident that the Perth market will continue to thrive throughout 2024. Whether you're a homeowner, investor, or simply keeping a keen eye on real estate, 2024 is set to be full of exciting opportunities! If you’re thinking of making a move or just after a little advice on the western suburbs property market, we’d love to help. Reach out below.