Ten Perth suburbs named on Rising Stars 2024 report by Canstar and Hotspotting

A national property report has poured some cold water on Perth’s property market, claiming it is showing the first signs of tapering off from a three-year boom.

The much-vaunted Rising Stars 2024 report by Canstar and Hotspotting ranks Perth as the fourth best place to invest, dropping down from third place in last year’s report.

Perth had outperformed last year’s expectation in the Rising Stars report, ending 2023 as the national leader for price growth.

CoreLogic figures show its median house price rising 15.6 per cent, compared to the national average of 8.6 per cent, while Perth’s median unit price increased 12.4 per cent, which was almost double the national average of 6.4 per cent.

“We are now seeing the first signs of moderation in the three-year Perth property boom, as sales activity starts to taper off from the recent highs,” said the 2024 report, released on Monday.

“The market share of suburbs with positive rankings dropped notably in the second half of 2023 – and, for the first time in three years, suburbs with negative classifications are almost as numerous as the positive ones.

“While the Perth market remains vibrant, it’s no longer a national leader in sales momentum. Prices will likely rise again in 2024, but the West Australian (WA) capital probably won’t be the national leader this year.

“Perth still scores highly on three of our metrics, but is relatively weak on two others, and our overall ranking for Perth is fourth, although close behind the top three (Brisbane, Adelaide, and Sydney).”

The report said buyers need to be more selective about their choice of locations.

Assessing each suburb on give metrics — sales volumes, quarterly price growth, vacancy rates, rental growth, and infrastructure spending — it included ten Perth suburbs in the list of 110 rising stars around the nation.

In alphabetical order, they are Balcatta, Banksia Grove, Belmont, Bentley, Golden Bay, Gosnells, Harrisdale, Midland, Greenwood, and Wellard.

Regionally, towns in the list include Broome, Bunbury, Geraldton, Greenfields, and Withers.

The report said sales volumes across Perth were somewhat weak, with sales activity declining in the second half of 2023, “providing early indications that the Perth boom has passed its peak.”

In its latest analysis, only about a fifth of suburbs, (21 per cent) of Perth suburbs have a trend of rising sales activity. For sales activity alone, it ranks ninth in Australia, down from second in the 2023 Rising Stars report.

But quarterly price growth remains strong, with 70 per cent of suburbs growing by more than two per cent in the last quarter of last year, the second highest in Australia, marginally behind Adelaide.

The report said Perth is extremely low vacancy rental rates, with virtually every suburb with a rate below one per cent, giving it the dubious title of having the “top ranking” among the 14 jurisdictions covered in the report.

“With vacancies at ridiculously low levels, population growth strong and the economy performing well, rents inevitably are rising in Perth,

“Nine out of 10 suburbs recorded rental increases above 10 per cent in the past 12 months, which ranks Perth second in the nation, slightly behind Sydney.”

Infrastructure spending appears to be one of the key drivers for property growth across the nation this year, with Brisbane topping the list ahead of preparations for the 2032 Olympic Games.

Perth was ranked seventh for infrastructure spending.

“Perth certainly has a busy program of investment in infrastructure (including upgrades to road and rail links) and commercial enterprises (with resources-related projects prominent), though not as prolific as the three biggest cities and regional locations like Queensland and New South Wales,” said the report.

Canstar’s ambassador and money expert, Effie Zahos says affordability was also considered in the report.

“Rising interest rates and living costs are impacting affordability and the borrowing power of buyers,” she said.

“This also extends to their ability to meet loan repayments.

“This is a concern for both new and existing homebuyers and explains why 54 percent of Rising Star suburbs have a median unit or house price below $600,000.

“The findings also show 37 percent of this year’s list consists of units, which is up from 18 percent last year.

“According to CoreLogic data, house values have surged faster than unit values, with the gap between median capital city house and unit values hitting a record high of 45.2 percent in January.

“Whether you’re purchasing a house or a unit, managing debt is an ongoing task.

“Even if rates drop by the year’s end, don’t expect them to dip as low as one or two percent. The era of cheap funding is behind us.”