Jonathan Barrett

Buyers are bidding above asking prices. Agents are running out of brochures at open homes. Viewings are cancelled as early bids roll in. Perth’s property market is back.

“The market is red hot out there,” said Gavin Hegney, of Hegney Property Group. “Interest rates are set for Sydney and Melbourne. If they were set for Perth, they’d have one finger ready to push the rise button.”

The speed of the recovery has caught most by surprise, after sellers suffered one of their worst years in 2011. In the middle of that year, stock levels peaked, according to figures from the Real Estate Institute of WA, resulting in a glut with more than 18,000 properties for sale.

This week, that figure fell to 9266, well below the 12,000 that signals a good balance between supply and demand.

Much of the interest is in properties costing less than $600,000. However, Mr Hegney said: “It still can be patchy. Not every property below $600,000 is going fast. People are looking near the city and they are still looking to be near ­transport.”

One of the country’s biggest property developers, Perth-based Nigel Satterley, said his company had sold 15 per cent more properties than this time last year, driven by sales in the north-west and south-west from “first home owners and those selling their first home and trading up”.

In a sign of the changing times, his company’s $7000 cash-back offer for house and land package buyers fell to $4000 in February. Rivals, some of whom were offering cars to new buyers just last year, have also scaled back their offers.

Mr Satterley said his company had $500 million to spend on land suitable for development in Perth and Melbourne, and there was now momentum in Western Australia’s land sales.

“That is coming off historic lows and there is still a big climb back to the peak of the market,” he said. “Things are moving in the right direction and we are planning for the long term.”

Perth had the highest rental growth of all Australian capital cities last year, according to Australian Property Monitors, as the city’s housing rents leapt 17.5 per cent – a huge increase that has encouraged many renters to buy.

WA has led job-creation figures and most of its residents are employed. The state’s level of unemployment is 4.3 per cent, compared with the national average of 5.4 per cent. There were 11,085 people (net) who moved from other states to WA last financial year and 47,147 people (net) from overseas, according to the Australian Bureau of Statistics. That figure equates to 1120 people a week, many of them choosing to live in Perth.

Some wealthier residents are seeking properties in the city’s exclusive western suburbs.

Greg Rossen, of Nedlands-based Rossen Real Estate, said the $1 million to $2 million market was popular, even if the market for homes priced above $2 million was still slow.

“There’s pent-up demand from people wishing to sell and people wishing to buy,” he said.

A character home on Robinson Street in Nedlands on a 700 square-metre block recently sold for $1.23 million after expressions of interest invited offers of $1.1 million or more. There were five offers and the underbidder was willing to pay $1.215 million, typifying the interest in that part of the market.

For high-end apartments it still appears to be a buyer’s market, with price reductions of up to about a third due to an oversupply of million-dollar-plus apartments.

Mr Rossen said WA remained vulnerable to the boom and bust cycles of commodities although threats of widespread job losses in mining have eased since the iron ore price rebounded quickly from its three-year low of $US86.70 in September.

“When I see a recovery under way, I also have a watchful eye on the commodity cycle,” Mr Rossen said.

Property agents are reporting modest sales for dwellings priced at more than $2 million, be they in Perth or the state’s south-west.

That part of the market relies heavily on confidence and the ability of buyers to borrow.

The Australian Financial Review