21/09/2011 - 10:28

Perth’s soft market spooks home sellers

21/09/2011 - 10:28

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Perth’s soft market spooks home sellers

Perth’s residential property market remains in the doldrums as sellers start to pull their properties off the market, the median house price continues to decline and an increasing number OF people choose to rent instead of buy. 

The latest data from the Real Estate Institute of Western Australia show the number of residential properties on the market in Perth has decreased 11 per cent since the end of June. 

REIWA’s head of research, Stewart Darby, said the number of listings in Perth fell from 17,400 to 15,500, but there had been little movement in turnover. 

“What we are witnessing is a large number of sellers simply taking their properties off the market, rather than stock being diminished through sales,” Mr Darby said.

On a more positive note, reports from REIWA members suggested there was less discounting associated with property sales.

“There is less discounting going on with sales, which suggests that sellers are finally getting the message and agreeing to price their properties to meet the market and not to hold out for unrealistic expectations,” Mr Darby said.

REIWA data show Perth’s median house price has fallen a further 2 per cent since June, which would be the sixth consecutive quarter of decline. 

The median house price is expected to settle at around $467,000 or slightly below that figure by the end of the September quarter.

Perth’s rental market has continued to contract, with the vacancy rate for rental properties in the metropolitan area dropping back to 3.1 per cent in the three months to August.

“The other interesting thing to emerge from current data is that there is upwards pressure on rents as the metropolitan vacancy rate has tightened,” Mr Darby said.

The median rent in Perth has jumped by $45 to $395 a week, and the number of properties for lease has fallen from 3,600 to 3,000 since June.

Low housing affordability is one contributor to the weakness in property values in Perth but, despite that, Western Australians still prefer to buy a house rather than an apartment.

Property information provider RP Data said unit sales accounted for just 18.9 per cent of all property sales in Perth, little changed over the past decade.

In contrast, apartment sales account for a larger, and growing, share of property sales in other states.

The average for all capitals was 32.7 per cent, up from 27.1 per cent 15 years ago.

RP Data said the generally wide gap between the price of houses and units had made apartment living a more attractive prospect to many generation Y buyers. 

Across the capital cities, on average, there was a $56,000 difference between the median house price and median unit price.

The difference was as high as $129,000 in Canberra and $103,000 in Sydney, but only around $70,000 in Perth.

Australian Securities Exchange-listed property developer Diploma Group has been adversely affected by the relatively weak demand in Perth’s apartment market, but said it was making progress.

The company said its small net loss for the year to June 2011 was affected by slower than expected settlements of apartments at its Cove, Foundry and Zenith projects before June 30 and a higher default rate of pre-sales at settlement.

In an update released this week, the company said it had made “significant inroads with respect to the sale of completed inventory”.

The group has secured approximately $12 million of new sales against an inventory of $53 million since August 31. It said these sales were expected to settle within the next eight weeks, allowing the group to reduce its debt.

Diploma also announced it had been awarded a $17.6 million contract to build a mixed-use residential, retail and office project in Leederville, on behalf of Foundation Housing, Anglicare and Central Institute of Technology.

 

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