Perth’s Real Estate Resilience: Defying Interest Rate Hikes
We have noticed that homeowners are slowly starting to sell off their properties to profit while their property value is currently at its peak.
According to CoreLogic data, Perth’s property value has gone up by 2.4% over the past year, while over east, Melbourne, and Sydney’s property value has gone down 9.6% and 13.4%, respectively.
Which begs the question, shouldn’t the property price start to fall if interest rates go up? It has steadily risen ten times since May 2022, from 0.10 to 3.60%.
The rate increases should have slowed down the value of the property increasing. It has over east; however, Perth still has a resilient market because of demand.
Perth’s Vacancy Rate
According to RealEstate.com.au, Perth has a vacancy rate of 0.85%, which means insufficient accommodations are available. Property owners and investors are willing to continue paying the increased interest on their mortgage while increasing rent to cover the cost of rising interest payments.
There are a lot fewer houses for rent than those for sale; there have been stories of hundreds of applicants applying for one rental property, driving up the rent and for those who are unable to win get a place by renting are then forced to take out a loan to buy a property while paying premium prices.
High Demand
The high demand is caused by a lack of builders and a rush of home buyers during the pandemic when interest rates for home loans were sitting at 1.99%. Additionally, as the borders have opened up, we can see a surge of migrants and students moving back to Australia, causing a housing crisis.
However, as banks slowly increased the variable interest rates for mortgages, we can see that property price growth has started to slow down. But I believe it will be a while before we see any significant fall in prices to allow new homeowners on the property ladder, as the demand in WA is very high right now.
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