Prestige property comes back a peg

HEAVY discounts in prestige property are an indication the Perth market is heading back to more realistic levels, according to new industry research.

Statistics released last week by property analysts RP Data showed nine of the top 20 most discounted suburbs in Australia were in Perth.

The research examined suburbs where the average price was in the highest 20 per cent in Australia, while all of the suburbs that experienced the greatest average discounts for houses were situated adjacent to water.

RP Data's figures were backed up this week by the Real Estate Institute of Western Australia's quarterly property report, which said 70 per cent of sellers were prepared to drop their asking price to secure a sale.

Leading the nationwide price drop was Applecross, which experienced an average drop in asking prices of 19.7 per cent during the past 12 months.

Swanbourne was second with an average discount of 18.4 per cent, while other Perth suburbs ranked in the national top 20 were Mount Pleasant, City Beach, Claremont, North Beach, Dalkeith, Mosman Park and Scarborough.

REIWA president Rob Druitt said Perth suburbs dominated the list because the WA market was at a different stage of the economic cycle when compared to the rest of the nation.

"The top end of the market has been correcting, particularly this year, whereas the east coast market has been starting to pick up; that's why nationally Perth suburbs would show up," Mr Druitt said.

"The top end of the market was hit harder by the global financial crisis and also it has run longer in the boom.

"The top end of the market had run higher in 2007 while the rest of the market was correcting.

"So it's still part of that shakeout, it's now stabilised, the top end of the market, and we've started to see a return to more normal levels."

Mack Hall, principal of western suburbs specialist realtor Mack Hall and Associates, said the discounted prices were a result of inflated property values that were unsustainable in today's economic climate.

"I think that certain areas were overpriced and they went up too fast," Mr Hall told WA Business News.

"All of a sudden when other areas started to come back they just didn't look right, they looked expensive.

"There's been plenty of criticism that the Perth property market was one of the most expensive in the world, and it had been hyped up."

But Banovich-Hillman principal David Banovich, whose real estate agency specialises in top-end Applecross properties, said a lack of activity in Applecross resulted in skewed data.

"The situation in our suburb is that there are very few sales occurring, so there are insufficient sales to say that the prices are actually being discounted," Mr Banovich told WA Business News.

"Now that may vary in other suburbs in Perth, but certainly in Applecross there's only been very few single residential riverfront properties that are sold."

North Beach-based Nexus real estate sales consultant Peter Berridge said the discounts provided positive opportunities for buyers.

"Anybody who buys a property today will be immensely pleased that they did," Mr Berridge said.

"The buying opportunities available today we probably haven't seen for a long, long time, and when you think you can pick up a property to day for half the price you could two years ago, that's got to be good, because we're going to return to normal soon enough."