House prices in Perth have dropped more than 3 per cent in the March quarter, suggesting activity in the housing sector may not be as strong as anecdotal evidence implies, economists say.
House prices in Perth have dropped more than 3 per cent in the March quarter, suggesting activity in the housing sector may not be as strong as anecdotal evidence implies, economists say.
Figures released by the Australian Bureau of Statistics today showed Perth's house price index fell 3.6 per cent during the March quarter, the biggest drop recorded out of Australia's capital cities.
Compared to the 2008 March quarter, Perth's house price index has slumped 10.1 per cent.
The average house price in Perth is currently $412,500, according to latest figures from the Real Estate Institute of Western Australia.
Nationally, the house price index fell 2.2 per cent in the March quarter. This compared with a downwardly revised 1.2 per cent fall recorded in the December quarter.
Economists had forecast house prices to remain flat in the March quarter and to have declined by 3.9 per cent in the 12 months to March.
In the year to March, the house price index fell 6.7 per cent.
Recent private sector surveys had suggested a build-up in activity at the lower end of the housing market following a boost to government grants to first home buyers.
But Nomura Australia chief economist Stephen Roberts said even if this was the case, it appeared to have little impact on average house prices.
"I just wonder whether the low end of the market is quite as active as we have been led to believe," he said.
"There may be some activity, but it may not be putting any upward pressure on prices.
"In fact, the risk is prices are still declining even in that part of the market."
In October last year, the federal government doubled the first home buyers grant to $14,000 for those buying an existing home and tripled it to $21,000 for those constructing their own home or buying a new home.
The temporary boost is due to expire on June 30.
The ABS survey found house prices fell 2.9 per cent in Sydney and 2.3 per cent in Melbourne during the March quarter.
House prices in Brisbane and Adelaide fell 1.1 per cent and 0.8 per cent, respectively.
Darwin had a stronger result, with house prices up 2.2 per cent.
Hobart and Canberra recorded rises of less than 1 per cent.
JP Morgan senior economist Helen Kevans said the boost to the first home buyers grant was expected to have prevented a fall in house prices in the March quarter.
"This burgeoning demand has kept house prices at the lower end of the house price spectrum well supported," Ms Kevans said.
"It seems, though, that these price gains were swamped by falling prices at the top end of the market."
Despite the decline in house prices over the past year, Ms Kevans said Australia was unlikely to suffer house price declines experienced in weaker offshore markets given the acute shortage of new homes and accelerating population growth.
The large number of variable interest rate mortgages was also limit the falls in house prices, Ms Kevans said.
JP Morgan has forecast house prices to fall 10 per cent in Australia from peak to trough in this cycle.
House prices in the 20 largest cities in the US fell 18.6 per cent in the 12 months to February, according to the Standard & Poor's/Case-Schiller home price index.
House prices in the UK fell 15 per cent in the 12 months to April, according to figures from British mortgage lender Nationwide.
