Perth, Darwin values lift as capitals cool down

As reflected in CoreLogic’s monthly housing chart pack, in the three months to April this year, the value of a dwelling in Australia grew by 1.9 per cent, with those in regional areas lifting by 4.7 per cent and capitals by an average of 1 per cent. 

However, over this period, the country’s largest two cities, Sydney and Melbourne, dropped by 50 bps and 10 bps respectively. 

Brisbane and Adelaide, however, again reported the strongest values in growth, with their values increasing by 5.4 per cent and 5.7 per cent each. 

However, not as expected were reported growths in both Darwin and Perth, with each city reporting a median dwelling value lift of 2.2 per cent and 2.4 per cent. 

The significance of this value shift, specifically for Perth, is in response to recent falls in value. During October, the Western Australian capital reported its first monthly dip in value since June 2020, dropping by almost 0.1 per cent.  

Darwin reported marginal growth over the same month, lifting by 40 bps. 

This trend managed to flip slightly by January this year, with the western and northern capitals lifting by 0.5 per cent and 0.6 per cent over the month. 

Over April, both Darwin and Perth reportedly increased 1.1 per cent and 0.9 per cent. 

For comparison, Brisbane and Adelaide – which also reported the strongest monthly growth – hit 1.7 per cent and 1.9 per cent.

Yet, while these figures remain higher, they also mark a drop from previous results, with the Queensland and South Australian capitals reporting 2.3 per cent and 2.2 per cent increase over January. 

Further, this downward trend over April was observed in every capital city, excluding Perth and Darwin.

Momentum shift for Perth

Additional data released by CoreLogic suggests that Perth dwelling values have lifted by 24.5 per cent since June 2020, further suggesting that the city could see a continued uptick in dwelling values. 

According to CoreLogic head of research Australia Eliza Owen, the “expansion of mining employment should see some upside amid the global recovery from the pandemic and, perversely, disruptions to commodity exports from Russia and Ukraine”.

“However, capacity constraints from a tight labour market and materials shortage may prevent these potential gains from being fully realised,” she stipulated.

Ms Owen noted that while Perth possesses an advantage of affordability, its median value of $552,128 – the lowest figure for a capital after Darwin’s $501,182 – is only $9,010 higher than the median value in 2014. 

But the head of research also noted that this low buy-in price combined with the city’s rental yields – an average 4.4 per cent, “the highest of any state capital” – could spark a surge in investors. 

“The city arguably has better prospects for medium term capital gains, and a low buy-in price,” Ms Owen noted.

However, she also conceded this may not eventuate for the western capital. 

“​​Perth may eventually follow other Australian markets into a broad based downswing as a result, just as record-low interest rates aided the recent recovery,” Ms Owen said.

[Related: Home construction approvals dive by 18.5%]