Perth housing now strongest vendors' market since 2006: MacroPlan Dimasi

Vendors will continue to have the upper hand in the Perth residential market due not enough new houses being built to satisfy the city’s growing population.

As a result of the supply of housing not keeping up with demand property market researchers MacroPlan Dimasi forecast Perth’s residential vacancy rate to tighten further from its current 2% over the next 12 months with the pace of residential sales to increase and asking rents to increase.

The report, prepared for WA-based Otan Funds Management, notes that there were around 8,200 dwellings on the market in March 2013 as opposed to a market equilibrium position of around 12,000 listed dwellings.

“This indicates a strong sellers’ market that has not been seen since the severe dwelling shortage of mid-2006,” say report authors Stuart McKnight and Andre Marcelino.

The graph below prepared by MacroPlan Dimasi shows that average days on market have fallen from around 80 as of December 2011 to just under 60 at the same time as residential listings have fallen steadily since March last year.

Also since March last year, sales volumes have been increasing steadily with dwelling prices recovering over the past two years.

The news is not good for those renting with vacancy rates stayed at a low 2% against a market equilibrium point of 3.5%, resulting in increases in the median rents of houses and units. 

The report highlights the high population growth statistics for Western Australia, where the population expanded by 3.47% in the 12 months to December 2012 with no Australian state having achieved such a high growth rate in the past 30 years;

Over 2012, the state’s resident population grew by 83,031 people, with much of this growth in Perth, where the city’s population has reached 1.9 million residents – a decade ago there were less than 1.5 million residents.

“Most of these people migrated from overseas and an increasing number of people have moved from other areas of the country,” say MacroPlan Dimasi report authors Stuart McKnight and Andre Marcelino.

The report says that over the last decade, population growth in Western Australia had been underscored by record mining investment forecasts.

The report forecasts population growth from the mining industry in Western Australia to peak in 2015, at approximately 37,600 persons, supported by the need for a 20,000 plus construction workforce and also to replace a wave of retirements within the industry – a direct result of the ageing demographic of the Western Australian mining workforce.