Perth: Median House Price Falls

Perth’s median house price reached an all time record in December, passing $474,000 at the end of last year according to last minute sales data trickling into the Real Estate Institute of Western Australia. However, official REIWA data for the March quarter shows the Perth median house price has since retracted by around $14,000 to $460,000.

REIWA President Rob Druitt said this correction was just part of the market consolidation phase after the boom of the last few years and that the current market provided real opportunity for buyers.

“There are now almost 18,000 properties on the market and whilst prices have come down the outlook for interest rates and inflation remains uncertain. That said, there are many potential buyers who are waiting and watching for the right time to buy, and now thinking about making their move,” Mr Druitt said.

Mr Druitt said the strong population growth in Western Australia was creating significant pent up demand for housing, with many potential buyers in the market keen to secure a home of their own.

The dip in prices and recent stamp duty cuts announced by the State Treasurer would be a strong impetus for would-be buyers to emerge through the winter.

Rents

“REIWA data are also showing that rents maintained their double digit annual growth during March, to a new median price of $310 per week for units and $335 per week for houses. The upward pressure on rents is also causing many would-be buyers to have another look at purchasing,” Mr Druitt said.

Perth’s tight vacancy rate for rental property continues, but is not as dire as this time last year when it plummeted to 0.8 per cent. The current vacancy rate is 1.4 per cent, although Mr Druitt was confident this would ease over coming months.

“Many investors trying to sell right now will find it difficult with so much competition in the market. So, it seems likely that many owners will decide against selling and instead turn their property over to the rental market for another year or two. This should prove a great boost to the rental system, offering more choice for tenants and helping moderate rent increases,” Mr Druitt said.

Regions

While metropolitan Perth experienced a decline in the March quarter, many regional areas saw good growth and a return of buyer confidence.

“After three quarters of negative growth, the Mandurah-Murray region bounced back with a 6.9 per cent lift, perhaps a reflection of the positive benefits of the new city-link train line.

“Whilst prices have remained stable in Greater Bunbury , Geraldton-Greenough and Kalgoorlie-Boulder’s median house price experienced solid growth of 6 and 11 per cent respectively,” Mr Druitt said.

Summary

Mr Druitt said with the way the June quarter is unfolding he expected further local price corrections as the build up of properties for sale washes through, and that there was likely to be only small gains in overall price through to the end of the year.

“It’s hard to escape the fact that significant pent up demand from buyers is just waiting to be unleashed. A strong economy generating strong population growth means there is increasing numbers of people all needing a place to live. Particularly now that the market is correcting, prices are coming down and affordability is improving despite some uncertainty on interest rates. Coupled with the recently announced stamp duty cuts taking effect in July, we will likely see new buyer activity pick up through late winter and into spring,” Mr Druitt said.