The big gains in Perth residential property prices in the first half of 2013 have come to a screeching halt over the past few months, but the adjustment in Perth pales next to the big falls in the Pilbara.
The big gains in Perth residential property prices in the first half of 2013 have come to a screeching halt in recent months, but the adjustment in Perth pales next to the falls in the Pilbara.
The softening of the Perth market is evidenced by three different sets of analysis.
Median house prices fell by 3.8 per cent in the three months to September, according to the Real Estate Institute of WA’s latest market analysis.
It found the median house price slumped to $505,000, though REIWA predicted the median would lift to $510,000 once all settlements were in.
RP Data’s latest analysis, for the three months to October, also showed a fall. It found that Perth’s median house price was down 0.6 per cent to $493,000.
The Bureau of Statistics had slightly more positive news, with its index of established house prices showing a rise of 0.2 per cent in the September quarter.
The weakness in the Perth market stands in marked contrast to big price jumps on the east coast, particularly in Sydney, where there has been talk of a property bubble.
In annual terms, the Perth market is still tracking reasonably well, with prices up between 5.2 per cent and 8.9 per cent, according to the three sets of analysis.
However Sydney is the star national performer, with prices up about 11.5 per cent over the past 12 months.
RP Data senior research analyst Cameron Kusher noted that Perth’s performance had changed markedly over a short period of time.
Two months ago, Perth was experiencing the fastest 12-month rate of value growth of all capital cities at 9.4 per cent, whereas this has now slowed to 6.9 per cent following the fall in home values over the past quarter, he said in a statement.
REIWA’s analysis showed the median price was affected by a big change in the composition of house sales, with first home buyers active at the “more affordable end” of the market and “softening activity at the upper end”.
“Some 75 per cent of turnover occurred within the band of $350,000 to $850,000,” REIWA president David Airey said.
The keen demand from first home buyers has led to a spike in prices for more affordable properties.
This finding is backed by Office of State Revenue data, showing that the median price for first home buyers across WA was $435,000, up from $400,000 at the same time last year.
Mr Airey said another noticeable trend in the September quarter was a 6 per cent drop in the number of metropolitan sales.
“Sales of units and apartments remained steady across the board, but house sales dropped away,” he said.
The REIWA data revealed weakness in the Perth rental market, with median rents dropping by $10, to $465 per week in October.
The fall in rents was much more extreme in the Pilbara, where some of the heat is coming out of the market.
Karratha rents were down 8 per cent on June levels to $1,100 per week, while Port Hedland rents hit $1,300 per week - down 10 per cent in the quarter and down 35 per cent in the year.
“These are still huge amounts to pay for weekly rent, but there are clear signs the mining sector is winding back with jobs and this impacts directly on the housing market in mining towns,” Mr Airey said.
Similarly, median property values in Hedland were down about 9 per cent in the quarter, but still at a very high level of $818,000.