Nine days on market tells Perth’s real property story

When national housing data lands, the instinct is to reach for the headline number.

Cotality’s latest Hedonic Home Value Index shows Perth dwelling values rose 1.5 per cent in May, 4.8 per cent in the quarter and 25.8 per cent over the year at a time when Sydney and Melbourne are falling and the national index has flatlined.

Framing this as a straightforward Perth success story is understandable, but it misreads what the data is communicating.

According to Australian Bureau of Statistics lending indicators for the March quarter, the overall volume of investor lending fell 5.3 per cent nationally, with Western Australia among the states recording the sharpest declines.

In any other capital market, a significant pullback in investor activity would be expected to soften values.

In Perth, values kept rising, with Cotality’s Home Value Index showing the city had recorded 91.4 per cent growth over the last five years.

That trajectory has not been driven by speculative capital but instead by the imbalance between supply and demand.

Total listings advertised in Perth were 14.7 per cent lower than a year ago in early May, according to Cotality’s latest Monthly Housing Chart Pack, while homes are selling in a median of just nine days.

The supply pressure is not confined to the ownership market. Perth rents rose by seven per cent over the year to April, according to Cotality, reflecting the same shortage of dwellings that is pushing values higher.

The people who cannot secure a home to buy are competing harder for homes to rent, and the market is responding accordingly.

When a market cannot adequately serve those who want to buy and cannot comfortably accommodate those who need to rent, it is not booming so much as straining under the weight of its own unmet need.

In the apartment sector, Cotality reported Perth unit values rose 27.8 per cent over the past year, outpacing house growth and reflecting concentrated demand for well-located accessible stock that Perth’s development pipeline has yet to match.

Perth’s continued growth in the face of weakening investor sentiment should be read as a structural signal about the depth of our supply shortfall, not as evidence that the market is functioning well.

The figures tell us we are nowhere near closing the gap between the homes being built and the people who need them.