Daniel McQuillan, CEO of Nu Wealth, predicted that “ house prices are set for a major national rebalancing ”, similar to what happened in the market 20 years ago.
Mr McQuillan said the strength of Western Australia’s economy would be the key factor that will help rebalance take effect over the next 12 months after growing slightly slower than other states in the world. last year.
“Latest national figures produced by the Real Estate Institute of Australia show that the median house price in Perth, at $ 520,000, was the lowest median house price in Australia’s capital and 45.9% below average national, ”he said.
The Managing Director also highlighted the strength of Western Australia’s economy with an unemployment rate of just 3.8%, the lowest in the country.
“The state’s economy is expected to grow 3.5% in 2021-22, which will be the fastest in eight years, with a budget surplus of $ 2.24 billion,” McQuillan said.
In calculating the numbers, Mr. McQuillan looked at the latest weighted average median house price in the eight capital cities of $ 961,642.
He predicted that the median house price in Perth should not be far behind the weighted national average based on Western Australia’s strong economy, implying that the city has the potential to increase its median home price by $ 400,000.
The median home price in Perth was almost equal to that in Melbourne in December 2013. The price differential is now close to $ 500,000.
“Nu Wealth believes the current national imbalance in house prices in Perth is unsustainable and during 2022, the median house price in Perth will start to gain ground as investors appreciate that the city is undervalued. This rise in house prices in Perth is expected to last for several years, ”said McQuillan.
Looking back, he said, “a similar trend occurred 20 years ago in 2002, when the median price of a house in Perth fell from $ 190,000 to $ 465,000 in 2007. “.
He anticipates a surge in Perth market activity once borders open on February 5, as people likely to buy move in the state.
For those looking to seize the opportunity in Perth, Mr McQuillan suggested looking at undervalued suburbs with high capital growth, such as areas near the CBD, the beach and the river.