THE challenging residential property market has been stuck at or below the long-term average turnover for the past four years, according to the Real Estate Institute of Western Australia.
According to REIWA’s review of 2011, WA experienced its lowest level of dwelling sales since the 1991 recession.
During 2011, 37,800 homes were sold across the state, a fall of 6 per cent from the previous year and a level below that experienced in 2008, the year when the GFC started to bite.
REIWA president David Airey told WA Business News that circumstances had changed for buyers, leading to a different complexion in the market place.
“We have been through a different market,” Mr Airey said.
He said first homebuyers were the most active buying group in the market.
“They look more active than they normally are because the investors have dropped to a nearly negligible figure,” Mr Airey said.
More cautious investors who also had less generous financing options were staying on the sidelines, he added.
The question posed by the low sales figures is whether the market has reset itself based on different buying habits created by the GFC.
REIWA figures show the 18-year average for WA was 52,000 dwelling sales a year, peaking in 2005 at 70,000, nearly double the level experienced last year.
“What is probably most striking is that we have now spent three of the past four years with turnover around the current level, approximately 25 per cent below the average,” REIWA director, policy, Stewart Darby said in his analysis.
“This may suggest that we have moved into a new market regime with the current level of sales becoming the new normal.
“This is not unfamiliar territory as we did experience this level of activity previously in 1995 and 1996 after the 1993-94 recovery.
“Whether the market undergoes a steady increase in activity over the medium term as it did from 1997 up to the peak year in 2005 remains to be seen, but changing socio-demographics and socio-economic factors associated with housing may restrict the market returning to these boom levels.”
While some areas were hit harder than others, the drop in sales is relatively consistent in the Perth market – which represents three quarters of the state’s turnover – when compared to the regional average.
Within Perth, the western suburbs area, a wedge of land radiating out from the city to the coast along the northern bank of the Swan River, suffered the poorest sales during 2011 with dwelling sales 38 per cent below the 18-year average.
The City of Perth resisted the trend of the western suburbs, with the area dominated by multi-level dwellings down just 10 per cent from the average, as sales remained steady in 2011 when compared to the previous corresponding period.
While overall the regions were similar, there were some stark differences between areas outside Perth.
Most dramatically hit was the Mid West, which contains Geraldton. In that area, dwelling sales slumped 47 per cent below the long-term average as the region’s iron ore development boom slowed and doubts emerged about the funding for a major port and associated mines.
Mid West sales were 28 per cent below the previous year.
By comparison, another mining dominated region, the Goldfields, also sat well below the long-term average at 39 per cent under, yet had a 15 per cent improvement in sales from the previous year.
Others sitting well below the long-term average were the Wheatbelt, at 45 per cent lower, Great Southern (-42 per cent), and the Gascoyne (-41 per cent).
Against the tide was the Pilbara where dwelling sales were 1 per cent above the long-term average.