In 2022, the strong Western Australian economy, resources sector and housing affordability helped the Perth residential property market remain more resilient than other states to successive interest rate rises.
Meanwhile, the rental shortage continued to produce significant challenges for many Western Australians.
So, what will the new year bring?
West Real Estate asked industry leaders to share their predictions for 2023.
PAUL BLACKBURNE BLACKBURNE MANAGING DIRECTOR
HOW DO YOU THINK THE PERTH MARKET WILL PERFORM IN 2023?
This year will continue to be a strong year for apartments in WA, with the east coast softening.
Interest rate rises will not affect buyers of larger high-end apartments, as they generally do not borrow to settle.
Their houses are worth 20-30 per cent more than two to three years ago, so they now have more equity to spend and will be able to buy a larger apartment than they could have two to three years ago.
We will see owner-occupier demand for larger high-end apartments continuing, with investors still being a small part of the market.
With rents booming, this has been offset by increases in rates, so net returns to investors after interest rates remain about the same as last year.
With construction prices up, there is no choice but for new off-the-plan releases to be at higher prices unless planning laws change to allow more density on certain sites and/or land prices ease.
We don’t expect construction prices to increase further so, with the market values increasing, we will be able to continue delivering larger high-end apartments at a reasonable price.
Perth prices have gone up steadily in the past few years, rather than with a large boom like we saw in the east coast, meaning we can expect more long-term sustainable growth.
The east coast markets will come back around 10 per cent, however they went up 30-40 per cent over the past three years, so people have still gained a lot of equity.
WA prices may only go up two to four per cent, however we have seen 20-30 per cent price growth the past three years so, although the rate of growth will slow, prices will continue to go up.
There is a shortage of larger higher-end apartments in the western suburbs, especially, and we expect this to continue for many years.
Prices this year will be higher than last year, as demand outstrips supply and very little construction has started. There is a major apartment shortage coming.
WHAT ARE YOUR APARTMENT HOT SPOT PREDICTIONS?
Areas near the beach where you can have apartments with views of, or over, the ocean will continue to be the most sought-after from owner-occupiers wanting to live in the prime suburbs.
The new Karrinyup town centre and shopping centre is a game changer for the area and there are almost no new apartments available for people who want to stay in the area they raised a family.
We also see that apartments in areas like City Beach will have the most growth as, again, there is no supply and huge demand from locals wanting to rightsize.
This does not mean there is strong demand for all projects in the area. They must still be iconic sites with a good value proposition.
WA’s planning system still makes it risky and difficult to get iconic projects approved in prime locations, where the demand from locals is.