Perth house prices modestly rise, again

Perth median house prices have risen slightly in the March quarter, but are down from a sharp increase experienced in the December quarter, according to an Australian Property Monitors report.

The APM House Price Report, released today, shows that house price growth in the March quarter slowed across the country as five interest rate rises and the expiry of the first-homeowner boost began to impact prices.

All capital cities except Adelaide and Darwin saw the rate of growth of the median house price fall in March compared to December last year.

Perth median house prices rose by 1.1 per cent in the March quarter, which is down from 3.1 per cent in the December quarter.

APM data shows that the annual house price growth in Perth of 9.4 per cent was well under the national average of 16.2 per cent.

Nationally, the median house price rose by 3.1 per cent in the first three months of 2010.

APM economist Matthew Bell said even though quarterly growth rates are moderating, annual growth rates are still rising.

"This is due to a relatively strong March 2010 quarter replacing a weak March 2009 quarter in the annual figures. National house price growth has hit 16.2 per cent in the year to March, driven by the annual rises in our two biggest markets," he said.

Mr Bell said like the last three quarters, price growth for houses in the most expensive half of the market were nearly double that of the more affordable sector.

Prices in the more expensive suburbs have proved to be less sensitive to interest rate rises and the removal of first home buyer stimulus, he said.

He said this top-end price growth has now moved well beyond a recovery of the price falls that occurred in late 2007 and throughout 2008 and is breaking new ground for most regions.

"While growth in the rest of the market has remained positive, rising interest rates are clearly having a more significant effect," Mr Bell said.

"Housing finance has now been falling for five months and, historically, price growth has tended to slow significantly six to nine months after finance starts to decline.

"This means that if past trends hold, house price growth should moderate further in the coming quarters.

"Countering this interest rate effect on the demand side is continued strong population growth, rising incomes, falling unemployment and very strong consumer and business sentiment."

The Real Estate Institute of WA president Alan Bourke said Perth's median house price is likely to pass the $500,000 mark in the March quarter as sellers and buyers gain confidence in the market.

Mr Bourke said the institute was showing 12,700 properties for sale in Perth at the end of March, representing a 22 per cent increase on December.

Hes aid this included more than 2,000 blocks of land, which was significantly more than some other recent reports on lot supply have suggested.

Mr Bourke said the increase in listings reflected a growing confidence in the WA property market, with buyers and sellers feeling that the worst of the global financial crisis is now behind them.

"The Perth median house price is very likely to top $500,000 for the first time when official figures are released in early May," Mr Bourke said.

"REIWA's internal data from sales by its members is already showing that we have reached this level."

Mr Bourke said the rise in the median price continues to be fuelled by a shift in the market to higher priced property, as the sales of homes under $400,000 subside.

Recent REIWA data showed increased sales activity in the March quarter in the $500,000 -$600,000 range, which is currently the strongest segment of the market.