Perth home prices tipped to recover

Growth in Perth’s housing market within the next six months has been foreshadowed in a report compiled by CoreLogic RP Data and ratings agency Moody’s.

There are signs of a recovery in Perth’s housing market, the combined report revealed today, with housing values forecast to grow modestly in the third quarter of 2016.

The report said reduced mining investment has weighed on house values in Western Australia, with Perth dwelling values 4 per cent lower than late 2014, while those in the rest of WA are 7.5 per cent lower.

“But the slump is ending through a combination of stabilisation in the labour market and reduced future supply,” the report said.

“Unemployment in Perth peaked in the December quarter of 2015. Incomes are still falling – with another 4 per cent decline in the first quarter – but the worst has passed, and we forecast a small improvement in the third quarter.”

The agencies said Perth’s housing supply wasn’t keeping pace with population growth, with building approvals down 12 per cent last year, while the population grew 1.4 per cent.

“Home values in Perth grew modestly in March and April, and a recovery is forecast to occur in the third quarter,” the agencies said in the report.

“The slump in the rest of WA will last a little longer, with house values declining through to the first quarter of 2017 before a moderate recovery.”

Earlier this month, CoreLogic data revealed a 2.7 per cent decline in its May Home Value Index for house prices in Perth.

However, compared with CoreLogic’s April data, the median house price in Perth grew slightly last month, to $506,000.