Bright side to house price drop

Perth's falling median house price may be causing doom and gloom for property owners, but two top agents say current market conditions represent a perfect time for potential buyers either to get a foothold on the property market or upgrade their position.

The latest analysis of the Perth market by the Real Estate Institute of WA showed a 2.7 per cent, or $15,000, fall in median house prices in the month of September, to $535,000.

Reiwa’s figures have been largely mirrored by those released by analytics firm CoreLogic RP Data, which recently reported Perth house prices had fallen by 3.8 per cent since the start of the year.

JLL’s property valuation arm, Propell, has also reported falling values in Perth, with its median of $520,000 at the end of September down 1.5 per cent from the same time last year.

The biggest factor in the price falls has been the availability of properties; Reiwa said the number of homes for sale at the end of last month was up 44 per cent on the same time last year.

Propell also said homes were taking an average of 85 or 86 days to sell, much slower than normal.

Those factors, combined with the historically low interest rate environment, are conspiring to provide perfect conditions for property buyers, Ray White Group chief executive Mark Whiteman told Business News.

“From a buyer’s point of view, we’re probably at a point where I wouldn’t be hedging my bets too much,” Mr Whiteman said.

“Whether we’re at the bottom or not, you’d hope that we’re awfully close.

“But you can focus forever trying to find the bottom or you can say ‘this is really, really affordable now, this is great value property, so let’s jump in’.”

Mr Whiteman said the market conditions were also favourable for investors, notwithstanding the big increase of vacant properties in the leasing market as well as falling rents.

Reiwa’s last update showed there were 50 per cent more rental properties available compared with this time last year, while median rents had fallen by $50 per week, to $410/week, during the same period.

CoreLogic RP Data also recently reported rental figures, which showed median rents for Perth houses were down to $463/week, a 5.7 per cent fall on the same time last year.

However, Mr Whiteman said this should not be a barrier to housing investment, as long as buyers were aware of the conditions and acted accordingly.

“The person who is purchasing today is buying at a different level to the person who purchased (previously) and (whose property) is on the market vacant at the moment,” Mr Whiteman said.

“Part of the reason for the number of vacant properties at the moment is that we are not adjusting to that part of the market fast enough.

“Prices have adjusted back, rents need to follow suit. If you’re investing at the moment, you need to get your property manager in pre-purchase, rather than buying it and shopping around for a manager and finding someone to make it work.”

Realmark managing director John Percudani said while it was dangerous to be too general regarding Perth’s housing market, the median price fall was an indication sellers had made a massive adjustment in their expectations.

Mr Percudani said Realmark had achieved good success in certain segments of the market, particularly for homes valued at more than $500,000.

“People that have built up good asset bases in better-than-average areas and have equity in those properties, they have got the ability to take advantage of the current interest rates and are taking the opportunity to upgrade their properties,” Mr Percudani told Business News.

“Plus we have a lot of baby boomers that are certainly adjusting their lifestyle.

“We’re seeing good results in markets like Applecross, Ardross, Floreat, City Beach – we are still getting great results in those markets.”

Overall, however, Mr Percudani agreed that residential property in Perth had turned firmly in favour of buyers.

“Where there is choice and there is a good availability of money, that’s a good time to enter the market, because these times don’t last,” Mr Percundai said.

“They can disappear in some respects as quickly as they appear.”