Is Everyone Selling in Perth? - With Junge Ma

You may have heard some people saying that everyone is selling in Perth. So if you are a Perth property investor, is it really the time to run for the hills and sell? At InvestorKit, we trust the data to do the heavy lifting and help us make the right choice. And understanding where Perth is at in 2025 is no different. In this episode, we're going to be pulling apart Perth in immense details, looking at current listings versus five years ago, and also knowing what's really going to change Perth's property market.

You've never seen Perth pulled apart like this. I'm Junge Ma, lead research analyst at InvestorKit. Let's get into it. So many people are saying that everyone's selling in Perth. That's partially true, because if you look at the number of listings as of the end of 2024, it's actually 32% higher than a year ago.

But that's actually not the full picture. To see the full picture, we need to go back in time. Here we have this chart showing the number of listings of Perth's house market from 2010 all the way to January 2025. Just in case you are listening to this episode on iTunes or Spotify, just head to our YouTube channel to see this screen share. Yes, it's true that we see this uptick from the end of 2023 to the end of 2024.

But if we look all the way back to five years ago, we'll see that the current number of listings is actually 37% lower than where it was in December 2019. And the December 2019 number of listings level is approximately the same as the average of its 10-year level from 2010 to 2020. So from a historic point of view, Perth's supply level is still at around a historic low range. And as a matter of fact, Perth is actually one of the tightest capital property markets in terms of supply. You may or may not know, the InvestorKit team has developed this supply shortage score system to measure the overall supply level in every SA3 region across Australia.

In this system, we measure not only the current established supply, but also the incoming supply, which is new house building approvals, and the supply level in the rental market, which is reflected by the vacancy rates. So in this January 2025 review, among the top 10 capital city SA3 regions with the highest supply shortage score, Perth has four of them, and that is the largest share among all capital cities. Another part of the full picture is that the selling activity is different from submarket to submarket within Perth. We are seeing this trend in many of the hotspot markets, including Perth, Brisbane, and Adelaide, that more people are selling in the relatively affordable submarkets and buying in the more expensive submarkets. There could be many reasons for this.

One is that the investors who purchased in the most affordable markets two or three years ago has gained a lot of capital growth, because we know that since 2022, the affordable markets actually have performed much better than the expensive submarkets. So investors have gained substantial capital growth in those affordable areas. So many investors are actually selling there, grabbing the high capital gain from those purchases, and reinvest in other markets that they see more chance of strong growth in the coming few years. So that's what some investors are doing. And on the other hand, owner-occupiers are doing something similar.

Two or three years ago, they could afford the cheaper areas, so they purchased there. And after two years or three years of strong capital growth, they now have gained lots of equity. And after two to three years of strong capital growth, they now are able to sell the previous purchase and utilize the capital gain there to buy somewhere closer to the city, perhaps with higher livability or higher convenience that they couldn't afford two to three years ago. And I will show you this with some charts. The first chart we are looking at here is the relationship between median house price level and the last one year number of listings change.

We can see this strong negative correlation between price level and number of listings change. Meaning, the more affordable SA3 region is, the higher the number of listings has increased. As you can see, while the most affordable suburbs are seeing 40 or even close to 50% of the number of listings increase at this time, the most expensive suburbs are actually seeing decreases in their number of listings. And the second chart is showing the relationship between greater Perth SA3's last three-year annualized capital growth and the number of listings change over the past year. Again, we see a strong correlation, but this time it's a positive correlation.

Meaning, the more prices have grown over the past three years, the more increase we have seen in the number of listings in these suburbs. So more people, including owner-occupiers and investors, are selling in the suburbs that have already experienced huge capital growth than the suburbs where house prices haven't grown as much. Now, let's put some of the best and worst performers in number of listings on the map and see how they are distributed geographically. The green dots are regions or SA3 regions that have seen the largest decrease in number of listings. And the red dots are regions where the supply level has increased the most.

What we can see is that the red dots are mostly in kind of the middle ring of greater Perth. These areas were quite affordable three years ago and they were the ones that gained the most capital growth over the past three years. And the green dots, as we can see, they are more concentrated in the area closer to the Perth CBD. They weren't as attractive over the three years and didn't perform as well as the other regions. So now more people are selling in the regions where they have gained a lot of growth and going to the center where the markets didn't see as high growth.

And at the same time, the SA3s in the outer ring is now still benefiting from their affordability and are not seeing surges in number of listings. Now, we have seen the full picture about Perth's supply level. The next question is, when will Perth not make sense? I'll share three signs here. The first sign would be listings surge consistently while the number of sales comes down.

The last time Perth saw a decline and stagnation was when two things happened at the same time. One is the increase of a number of listings or supply level. And the other thing is the decline in number of sales, as we can see in this chart from 2014 to 2016. Price growth is all about the relationship between supply and demand. And so next time when we see supply going up while demand going down, that's the time when growth will really slow down.

And the second sign would be population growth and internal migration dropping. If we look at the last 20-year growth of Perth, we see this strong positive correlation between population growth and internal migration trends and property market performance. When population is high or the growth rate is surging, and at the same time internal migration is going up or stays low, the property market would usually perform really well. And when population growth rate comes down or stays low, the property market would either decline or stay stagnant. As of now, the population growth in Perth is the strongest ever, while the internal migration trend is also increasing.

So as long as these two are not coming down, housing demand in Perth would stay strong. And the third sign is sale days on market. At this moment, the sale days on market in Perth is at the lowest level in more than 20 years. That's a sign of really high market pressure. But if one day we are seeing the days on market in Perth surging consistently to more than 30 or 40 days, that will be a concerning sign of the loss of market pressure in its property market.

So in summary, is everyone selling in Perth? No. Some investors or owner-occupiers are indeed selling in Perth, but there are not many selling to turn Perth from a tight market to a loose market. We are seeing this trend in Perth and some other hotspot markets that more people are selling in the areas where house prices are affordable and have grown a lot over the past three years, and buying or redeploying their capital in the areas where house prices are perhaps more expensive and haven't seen as strong growth over the past two or three years. I hope this episode has clarified something about Perth for you, and I hope you enjoyed it.

If you have any questions about Perth or anything about property and data, put your comments below or reach out to the InvestorKit team. I'm Junge Ma, the lead research analyst here at InvestorKit. I'll see you in another episode.