2024 Perth property market predictions

Coming into the start of 2024, the Perth property market is well placed for an exceptional year of growth, and it seems it’s going to be a less turbulent place to be developing, building and subdividing. When the numbers came in at the end of last year, both Perth and regional WA centers were in the top 3 national performers for the year. The metro achieved on average about 1% a month consistently, with some of the the regional centers doing even better. Let’s look at where we ended up last year, where we are now, and what 2024 has in store for us!

By the end of last year, we had the perfect storm for housing price growth:

• New resources projects (both operations and construction in full swing) drawing thousands of new workers (and their families) to the state each month. By the middle of last year, we were only second behind Queensland for migration numbers, by end of year, close to top. By the time new data comes out in the next few months, we may very well be on top!
• Lagging dwelling approvals, dwelling commencements and completions means supply has never been so low at such a pivotal point of economic and population growth. we need houses more than ever, and there just aren’t any: lowest stock numbers of units, houses and commercial (all types) in recorded history!
• Ongoing (but easing) labour supply and workflow pressures for existing housing projects, pushing many homes into the fourth year of construction.
• Cascading builder insolvencies (peak volume in final quarter of last year) further constricting supply completion.
• Endless month on month interest rate rises, scaring many developers and buyers/builders from committing to projects and more supply in the pipeline.

What is there to look forward to though, that makes developing (and getting plans to) in the pipeline?

• The reality of it taking 3-5 years (optimistically) to get supply of housing back in balance at CURRENT, not projected population levels. If growth keeps going the way it does, it will take even longer. Prices, and rents, can only keep going up.
• A heap of renters and people building their dream homes since 2020 FINALLY moving into their new home, freeing up some new sales stock and opportunities for sites.
• A growing herd of overseas students, migrants and interstate workers to keep pouring into the most affordable state in Australia, keeping demand for any rent or sales stock strong.
• Interest rates steadying, with some experts even tipping falls later this year.
• Lender’s interest and confidence in the housing market returning, with some lenders policies supportive of development. Up to 4 on one title with a residential facility are being offered by a few of the lenders in the market, with more to follow.
• Inflationary pressure easing and some downwards pressure on pricing, with materials price steady (some falls in timber and steel) labour rates for some trades starting to fall. This a consequence of dwelling commencements falling to 900-1200 a month over the last year. This is not enough to fill the whole of volume more than double this in the years prior (almost 2500 a month in first half of 2021). As all the building bonus grant projects form 2020 complete this year, will see competition return ot the market, timeframes come back, and the builders who remain will be in a position ot price more confidently and sharply and still maintain a margin.
• Planning reform; the long awaited medium density codes will be released ( again) in April 2024, allowing us to get back to more opportunities with a diversity of dwelling types, particularly small and accessible dwellings.
• The removal of the need for planning approvals for ancillary dwellings (granny flats) on any size lot, to fuel more supply of housing in the market.
• Overhaul of JDAP approvals pathway reform for midsize projects. JDAP now open to all multiple and grouped dwelling project proposals over a certain $ threshold, with no minimum number of dwellings required for referral.

It’s no understatement that 2020 to 2023 has been an absolute beating for builders, developers and consumers alike. As the housing ecosystems adapts however (through organic forces and government policy intervention), we will finally be in a position to move with some confidence in the housing market. Values and rents are finally moving faster than costs to deliver, timeframes to deliver are dropping, approval pathways are getting reformed and new planning frameworks will give us a raft of opportunities to capitalise on. Whether you are a mum and dad team or seasoned infill developer, there is new opportunity for you. If you’ve come this far, the next few years are tipped to be some good years, and we see every reason to agree.

Perth is the most affordable city in Australia now, and the number one growth prospect for the year ahead, at a sustainable rate. Our biggest challenge for 2024 is getting more housing supply to market, and that is the opportunity you can choose to be part of.

We help our customers learn about, prepare for, source and execute profitable property developments using our EPIC project process. if you would like to learn more about doing an EPIC project and what this entails, please get in touch with our team today using our contact form.