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Perth Housing Market Hits Historic Lows | September 2025 Market Update · The Follio Property Podcast

• 0:00
  If you would like full access to the September report, please comment Perth Report in the YouTube link below and we'll send you it out via email.
• 0:10
  It's happening again, Lachlan. It is. It's been a big month, hasn't it? 1.6% growth for Perth in September. A lot of that activity driven by both houses and units. I know we've spoken on previous updates, a lot of units have been driving that value. But off the back of what we're thinking is the sentiment from the first homeowner scheme cap increasing. We've seen a massive drive on the houses as well as units in Perth.
• 0:34
  Yeah, and to be honest, forecasting that for the remaining months of the year, I think it's only going to increase in terms of that capital growth. We've come off a couple of rate cuts, obviously the first-own-buyer scheme, and now the supply-demand imbalance with all the migration coming in. 1.6% growth for the month is significant, but I think that's light on for what we're going to see for the next three months. Yeah, and almost half the annual growth has come, more than half I should say, in the last quarter. Yep. Yep.
• 1:01
  And we expected this. We knew it was going to be a slow start to the year with the uncertainty around interest rates, obviously, politically speaking as well. But we're really starting to see it warm up and I think we'll see a big last quarter of 2025. One of the big drivers is listings. I think we said last monthly update, the lowest we'd seen. Lowest in history, right?
• 1:23
  lowest in history. It's happened again this month. It's broken another record down to what? 2, 8, 4, 3. Yep. That's the lowest. If we have a look at our prop stack data here, the decline pretty much has played out for the last six months. You can see a falling listing market from just over 4,000 to now, like I said, 2,850.
• 1:43
  42. Look at our prop stack data. What's interesting though is the sales activity. So what I'm showing here on the screen is current sales. Now, if you track this back, we're looking the last 10 years, but let's take it back even 15 years to give you context. The amount of sales when you track back to peak times in previous cycles, we were getting about 2000 sales a month in the last peak. And
• 2:08
  We've consistently now for the last three months tracked around 3,000 sales a month. So what does that mean? That's a real demand indicator for us. Now, when we overlay the stock on market for houses, for instance, you can see a serious decline. And this is going back the last 15 years. So there's a...
• 2:26
  We've never seen a disparity as great between the number of sales, demand equation, and the number of listings, the supply equation. As you can see, pretty well, we've seen a sharp decline in listing activity since 2019 when there was almost 15,000 properties on the market. A balanced market, you could say, is around that mark. And now we're at all-time record lows, but still getting all-time record high sales volume. So demand's higher than it's ever been.
• 2:52
  and supply is lower than it's ever been. You don't have to be an economist to work out what's gonna happen for the next three to six months. Yeah, and from what we're seeing in the market, is it investor activity or is it owner ox, principal place, people wanting their principal place that are looking to get in the market and are maybe
• 3:11
  lost out a lot of opportunities, trying to get maybe emotional on the transaction and overpaying. What are you seeing in the market when the listings are this low? Yeah, so 12, 18 months ago, it was a lot of East Coast investment. We've seen that narrative change because obviously it's easy for East Coast investors to invest in the East Coast. What we're seeing now is a lot of local unoccupiers competing with a lot of local investors and it becomes self-fulfilling, right? Everyone's like, how's Sydney going on a 15-year run?
• 3:37
  Well, when people make money in a market, they generate equity. They're more confident. They get that equity, they recycle it back into the market. And in Western Australia, we're a long way from anywhere else in the country, right? So the easiest place to invest when the sentiment's really positive is back into WA. So we're seeing a lot of local investment compete with a lot of owner-occupier activity.
• 3:57
  And looking at the weekly price growth, I know we spoke just at the start there, we're hitting records last month, we've been hitting records all this month. But if you're looking at the graph over the last six months, just this year, it's consistently been driving up, consistently been driving up throughout the year. What do you think is going to happen? Forecasting, we're in the start of October now. What do you think is going to happen for the rest of the year? Is it going to get lower?
• 4:21
  I think it can, Rhys, and this is probably concerning for listeners. I think we will see lower listing activity in the last quarter of 2025. And the reason for that is because we're heading into that seasonal Christmas period and you'll find agents are very hesitant. And as an advisor, I would advise people looking to sell to not list in December because you run the risk of
• 4:42
  that buyer fatigue that you can run into in late December. You've got Christmas, so if you don't sell it prior to Christmas, you don't really want to be running over that period. So you typically don't see any listings come on the market really close to the first week of December. So what does that mean? Essentially, we've got eight weeks of selling left in 2025, which means
• 5:04
  if we don't see an uplift immediately in that period of time, we're going to end the year lower than 2,842 listings and that's probably going to scare a lot of people. But to answer your second question around the market movement, and people ask me, is it overkill to track weekly market movement? No, it's not because we want to be able to make decisions with updated data and that's not waiting until CoreLogic releases its monthly report. It's seeing what's happening in the market on a weekly basis and we're able to do that through PropStack.
• 5:33
  But we're seeing now consistently the market do more than 0.3% growth a week. So what does that mean? That nets out to about 1.2% growth per month, which capitalizes to about 18% growth year on year. So we can start to see where the market's potentially traveling over the next 12 months. So it's a really good lead indicator.
• 5:53
  And it shows we had a soft start to the year. We knew that, you know, politically speaking on an international level, there was some uncertainty. Interest rates, there was some uncertainty around that. But as you can see, the confidence has started to build. When the market starts to build this confidence, it almost becomes self-fulfilling. So FOMO...
• 6:11
  and media can drive a market almost harder than that supply demand imbalance. So at the moment, when you've got the news stories, Albo's come out and said it's going to drive prices and he's okay with that. Very strange comment to make from our leader. You've got tailwinds when you're talking about interest rates potentially forecasting a cut in the next quarter. And now you've got a first-time buy scheme that's really going to ignite it, plus huge immigration that doesn't seem to be slowing down. So it's...
• 6:40
  It is exciting on one hand, but also it's almost a little bit nervous for those trying to enter in the market when it's going to be so bullish. You spoke there on demand and briefly touched on migration data, but we've got the latest set of results for Perth, or WA I should say, in terms of...
• 6:59
  interstate and overseas. Now, the overseas one's a big uptick, so 60% growth since the last results were recorded. So really showing Perth still that destination place for an overseas migrant, whether that's work opportunities, lifestyle choice, interstate migration, we're moving quite steadily in terms of growth on that. And you've only got to look at the graphs that we will pull up from pre-COVID. Perth was losing more people
• 7:24
  every year from a net perspective. And now post-COVID, from a lifestyles or affordability standpoint, we're just seeing that consistent growth. Here we are. So we're losing about 15,000 people a year to interstate migration through that 14, 15, 16 period, right through to about 2019. Now that's flipped. We're getting 15,000 to 20,000 people from interstate alone. But as you can see here, the WA...
• 7:49
  quarterly net overseas migration numbers, it's increased by 60% in the last quarter. That's massive in a market that's already undersupplied. And that's where the real heavy lifting comes. So 60% increase for East, which is 15,000 people have moved to WA from overseas in the last quarter.
• 8:07
  In a market that's significantly undersupplied and national building approval has just dropped by 7%, so we know we can't build enough. There's not enough builders around to bring on stock, and yet we're seeing almost back to our peak COVID levels or post-COVID levels of migration. It just really puts...
• 8:24
  a lot of fire behind that demand equation. We always thought we had to supply and demand. Population growth is a lead indicator for demand. And that level of growth is gonna hit the housing market pretty well immediately. Because when people move here from overseas, it's not like natural births where you're waiting 18 years until they need to be independent to find their own home. They need housing through rentals or by buying property immediately. Looking at the interstate migration, we've seen a serious shift in WA post COVID where
• 8:52
  historically people were leaving from a net migration perspective, whereas we've seen huge uplift initially and seen consistent interstate migration.
• 9:00
  Yeah, when you look back, Rhys, to our previous downturn, we're losing 10,000 to 15,000 people to East Coast jobs, typically employment, right? Leaving, packing up projects here in Perth, moving across New South Wales or Queensland predominantly. We're now seeing the opposite, where we're seeing 4,000 to 5,000 people moving here a quarter, which is the highest level interstate migration we've seen in almost 20 years, which is significant, right? So you throw the 4,000 to 5,000 people moving here interstate,
• 9:28
  on a quarterly basis, with 15,000 to 16,000 people moving here from overseas on a quarterly basis. It's almost 20,000 people moving to WA on a quarterly basis. That's significant, really significant. And that puts so much pressure on the housing market, both in the rental and the buying space or the selling space. So this is, I can't understate the impact of,
• 9:56
  on this data set alone. And when we look at our prop stack data and track back historically on population growth, as you can see here, we'll track it back 25 years, take a deep dive in the history of population growth for Western Australia. We're at our record high levels of population growth in this state.
• 10:13
  Now, the age-old question, we keep saying that with Perth, is it unaffordable now? Do you want to pull up the affordability index and maybe just explain to the viewers what the affordability index is? Yeah, so let's jump in. I'll look at Perth houses and units to give you a context there on our PropStack data analytics. So the affordability index tracks the average wage consumed by the average mortgage. So it's pretty much what...
• 10:36
  Each punter in Perth is spending on their mortgage on an annual basis. And as you can see here, and what it factors in is interest rates, median house prices, and incomes. You can see here in the pink line is the affordability index for houses. Obviously, we've seen a little bit of an uptick in the last month because we've seen price growth. Interest rates haven't come off. Price growth's running harder than income. So we've seen that tick up to 34%, which sounds amazing.
• 11:05
  Expensive, 34% of your income on a house is going to your mortgage. But historically, still extremely cheap. We did cap out in 2007 at 50%. So what does that tell us? There's still clear runway. And we'll speak about that runway in a moment. The units,
• 11:22
  Obviously, a little bit unaffordable than they were last month because we've seen a lot of that capital growth in September come in the unit space. And we spoke about this. We called this about four or five months ago that units and villas are going to be the strongest performing asset class for Perth. And it's proving us correct. That's currently at 24%. So was it 23.5%?
• 11:43
  24% but to give you context that has peaked in 2008 at 43.24% so again still a lot of runway you might be like well what does that mean for runway I'll give you just our runway calculator here when you look at solely at Perth based on an interest rate at a variable rate at 5.23 could be generous but at 4.23 you can see a housing runway of 61% and a unit runway currently
• 12:13
  So what does that mean? If we were to go back to the affordability index and these markets were to hit their historical ceiling for units, if interest rates didn't change and incomes didn't change, prices would have to double, which will shock people.