May 29, 2024 by Dymphna

Why is Perth crushing it right now?

Who put a rocket under Perth?

Perth is crushing it right now.

Late last year I said I expected 2024 to be the year of Perth of the year of Brisbane.

Well, Perth has pulled the whip out and has opened up a sizeable lead on the rest of the country.

And not just in terms of price growth, but also in terms of rental growth too. For investors, cashflow is the lifeblood of investing, and Perth investors will be very happy with how things are playing out so far this year.

And Perth’s results are starting to attract attention. CBA economists recently did a deep-dive on the Perth market.

They note that on CoreLogic’s dwelling values index, Perth home values rose by 6% in the three months to April, dwarfing the quarterly 1.7% rise across the combined capital cities.

6% in the quarter is 24% annualised, which is about as good as any capital city market has ever done… ever.

But it’s not a flash in the pan. Perth has several years of strong growth under it’s belt now, and Perth’s dwelling values have risen 59.3% since the onset of the pandemic, the highest growth in the nation:

So that’s on the prices side. When it comes to rents, CoreLogic data also shows that Perth’s rental market is experiencing the strongest growth in the nation, with annual advertised rents climbing by around 14%:

I don’t know that newcomers to the market really how strong this kind of growth is. There are very few periods in my memory where rents anywhere were growing at such a strong clip.

Not only that, rental growth seems to be accelerating. Annualise the last quarter of results are you’re looking at something like 16% growth.

And so the question then is why? Why is Perth crushing it.

Well, like most things in economics, it’s all about supply and demand. And CBA note that WA currently has the strongest population growth rates in the country.

And looking forward, you’d have to think there’s still plenty of upside potential. Perth remains very affordable compared with the other capitals:

And given how strong the Western Australian economy is right now, I wouldn’t be surprised if they make good on that potential.

But you do have to remember that Perth’s market has traditionally been more volatile than the other capitals.

Between 2014 and 2019, Perth property values dropped by 18% as the iron ore market crashed.

Perth is far from a one-trick pony, but where mining leads, the economy follows. So there’s risks to the outlook here.

But for now, and for this year at least, it’s all about Perth.