Perth has the weakest capital city house price increases in 2021 and are below 2014 peak

Australia’s most cut off capital city has had the slowest house price growth in 2021 – and values remain below a peak set seven years ago.

Perth’s house price increases – at a monthly and annual level – are the weakest among the state capital cities, with values rising at only half the pace of Sydney. 

The city is also Australia’s most isolated capital city, not just geographically, with the West Australian government now deeming visitors from New South Wales and Victoria to be ‘extreme risk’.

People from Queensland and South Australia are classified as ‘high risk’ as Omicron cases surge on the east coast.

While house price records are continuing to be set across Australia, Perth’s median house price is still below a peak from seven-and-a-half years ago. 

CoreLogic’s head of research in Australia Eliza Owen said despite a recovery that began in 2019, Perth’s median home price was still 2.4 per cent below a record set in June 2014.

Property analyst John Lindeman said the evidence showed population had little to do with house price increases.

‘Even when we compare price performance in capital cities with similar housing prices and population sizes such as Perth and Adelaide, we quickly discover that their performance can be very different,’ he said.

‘Perth’s housing market growth run appears to be over, while Adelaide’s is gaining strength.’

Perth’s median house price edged up by just 0.2 per cent in November and by 14.8 per cent over the year to $552,158, CoreLogic data showed.

By comparison, Sydney’s median house price last month climbed by 1 per cent for an annual increase of 30.4 per cent to an even more unaffordable $1.361million. 

At first glance Sydney, with a population of 5.3million people, has more than double Perth’s 2.1million.

But Hobart, with must 240,000 people, saw its house prices last month rise by 1.2 per cent in November for a year-on-year increase of 26.6 per cent, taking the median house price to $726,779.

Adelaide, with 1.4million people, saw its house prices rise by 2.6 per cent in November for an annual increase of 23.9 per cent to $608,624.

Brisbane’s mid-point house price last month increased by 3.2 per cent for an annual rise of 27.9 per cent to $757,194 in a city of 2.5million people.

Darwin, home to 147,000 people, was last month the only capital city where prices went backwards, with median house values shrinking by 0.5 per cent for an annual increase of 14.8 per cent to $562,900.

But Mr Lindeman said it was wrong to assume smaller markets were automatically more volatile. 

 The city is also Australia’s most isolated capital city, not just geographically, with the West Australian government deeming visitors from New South Wales and Victoria to be ‘extreme risk’ with Queensland and South Australia classified as ‘high risk’

‘Other experts claim that it’s a small market size that causes price volatility because even tiny changes in buyer demand can lead to big changes in prices,’ he said.

‘However, dwelling price data for our two smallest capital cities by size, Hobart and Darwin, clearly shows that Darwin’s housing market has experienced far more volatility and even gone negative while Hobart continues to offer strong price growth to the city’s property owners.’

Apart from having the weakest annual growth among the state and territory capitals, Perth and Darwin’s economies are also more tied to the fortunes of the resources sector.

Western Australia’s population growth can fluctuate with the iron ore price while the Northern Territory’s top end is linked to liquefied natural gas.

‘While the market size and property prices obviously have an effect on demand, the real cause of price changes is the relationship of supply to demand,’ Mr Lindeman said.

‘As long as the supply of properties on the market is less than the demand for them, prices will rise.’

While house price records are continuing to be set across Australia, Perth’s median house price is still below a peak from seven-and-a-half years ago (pictured is Western Australia’s Premier Mark McGowan)