Spike in Sales Close to City Produces Record-Breaking Median House Price

While many decry the “end of the mining boom” and predict gloom and doom for the WA economy due to the recent contraction of the resource industry, it isn’t being reflected in the Perth housing market. According to the Real Estate Institute of Western Australia (REIWA), the median home price in Perth is $535,000, which is $10,000 more than the previous high of $525,000 during the June quarter.

Thanks to the increase, Perth property management prices are running contrary to national price gains, which slowed down in November. David Airey, who is the president of REIWA, commented that those who haven’t yet bought property in Perth are wondering if they will be able to afford to buy property. Mr Airey also thinks that those who have bought or who’ll buy now will be “very happy they’ve invested in the Perth property market.”

According to Mr Airey Perth prices are now higher than what they were at the peak of the mining boom. During the mining boom, median prices peaked at $515,000, which is $20,000 lower than the current figure. Perth joins Sydney as the only capitals to produce record-breaking median prices in 2013.

Low Interest Rates are Working

The ABS figures show an increase in house prices and with the interest rate at a record low 2.5%, lenders are passing the savings on to customers with many lenders offering both fixed and variable rates below 4%. Lower interest rates lower repayments, making it easier for many first-home buyers to afford housing. First home buyers have also benefited from the current WA First Home Owners Grant of $10,000 for new houses.

Vacancies Increase while Rental Costs Decrease

The only statistics that aren’t great news for those with investment property in Perth are those concerning vacancies and rental costs. In January, there were approximately 2,000 vacant rental homes, but that has doubled over the year to a current 4,000 vacancies. Rents dropped 2% over the last three months. 2% doesn’t sound like a lot, but it projects to 8% over a year. This could put a serious dent in a mismanaged investment property.