The Real Estate Institute of WA has quashed claims by a leading property forecaster that Perth's house prices are set to fall 15 per cent over the coming year, saying past predictions have been proven wrong.
REIWA president Rob Druitt told WA Business News that although the property market is undergoing a correction, the situation is not as dire as Australian Property Monitors has projected.
APM said a weak housing market in Perth had caused a 2.8 per cent drop in median house prices over the June quarter to about $496,000. It also maintained its forecast of a 10-15 per cent drop in the median house price over the coming year.
Mr Druitt said APM had made similar claims in August 2006 that house prices were projected to fall by 20 per cent over the coming year and had made similar calls in 2007, which was in stark contrast to the 13 per cent rise and the peak that was reached in the 2007 December quarter.
"We have some reservations about their capacity to accurately call the market given that they were calling a 20 per cent reduction when it fact it went up 13 per cent," Mr Druitt said.
"The likelihood of seeing a fall of that magnitude [15 per cent] we believe is remote.
"Certainly we could be in for one more quarter of correction but we're still grappling with an oversupply in the market place through excess building over the last 6-7 years, so until that washes through during 2008-09 we expect to basically see a flat market environment with little price growth if any."
Mr Druitt added certain factors also had to be taken into account such as interest rates, oil prices and inflation.
"The last time that we saw any sort of major correction like in 1990-91, unemployment was racing towards 10 per cent and we were coming off 17 per cent interest rates, we're really not in that environment right now.
"There's pent up demand; there's buyers out there who want to buy but they're wondering when the market's going to bottom out."
Mr Druitt added there were about 17,000 properties for sale, a figure which has been static for the last three months, while rental vacancies have doubled in the June quarter to 2.8 per cent.
Earlier this month, REIWA reported a three per cent fall in house prices over the June quarter.
The official median house price from REIWA for the June quarter is about $446,000, a fall from the previous quarter's $462,000.
