REIWA tips steady prices

THE Real Estate Institute of Western Australia is predicting Perth's median house price to remain steady over the next 12 months, while the rental vacancy rate is tipped to decrease slightly over the next quarter.

Quarterly data released by REIWA last week showed Perth's median house price grew by 1.5 per cent during the past three months, increasing to $457,000.

Newly elected REIWA President Alan Bourke told WA Business News he expected the median price to remain steady in the coming year if the Reserve Bank of Australia adjusted interest rates further upwards as the economy recovers.

“I don't want to crystal ball gaze, but I think it will be pretty much the same sort of thing that we've experienced in the last quarter, a business as usual, steady-as-she-goes sort of market," Mr Bourke said.

“I think we're behind the other states in relation to median price growth but they're coming off a much lower base, they haven't had as much price change in the last five years in Melbourne and Sydney."

He said the Perth market would begin to be defined by the presence of trade-up buyers at the higher end, between $1 million and $2 million, at the same time first home buyers exit the market as a result of the reduction of the first home buyers boost.

“We're now starting to see the top end of the market become active, it was just in the doldrums before," he said.

“The $2 million end of the market is never a big chunk of the market, but 12-18 months ago there was no market there at all, there was a tonne of stock sitting quietly in the marketplace waiting for some form of green light.

“That's now happened, and in the western suburbs, their days on market have come down 14 days just in the last quarter.

“They're down to about 62 days to sell a property, and that's a dramatic change.

“A number of those owners there have adjusted their prices, but a lot of people just sit on the fence.

“It gets very uncomfortable sitting on the fence, so once the green light goes, on everyone jumps in, and starts taking the stock out of the market.

“We've seen stock levels drop dramatically, down from 18,000 at its peak down to 11,200, so we've got a third less stock in the market now than there was 12 months ago."

Meanwhile, in the rental market, Mr Bourke said he expected the vacancy rate to decrease in what is traditionally the strongest quarter for rental demand.

The preliminary data for the September quarter showed the current vacancy rate of 4.8 per cent was the highest in 14 years.

“Traditionally this next quarter is one of good, strong demand; we see a lot of people moving in like musical chairs," Mr Bourke said.

“We see a lot of pensioners moving in, we see corporate transfers, people moving in for Christmas, so we traditionally see an uptake in demand in the fourth quarter of every (calendar) year.

“I wouldn't imagine (the rental vacancy rate) would blow out, I would imagine it would come down a little bit."

The quarterly data indicated Perth's median rent remained steady throughout the last quarter because of a surge in first homebuyers exiting the rental market, which created an increase in rental supply.

Mr Bourke said he did not expect the median rent price to increase in the near future.

“I think we've got a little bit more stock to come through," he said.

“The drop in rents has been mainly in the inner city; where there's still good levels and I don't see that the rents will increase in the inner city for a while.

“I think we've got to get a lot of stock out of that market, and East Perth and other suburbs.

“We're saying to investors 'just be steady with rent, don't go berserk, if you're coming up for a rent review just be sensible, just leave it where it is, or make a tiny change, but don't leave it vacant, because the vacancy factor's high'.

“We're up to 4.8, which is an unusually high figure. If you've got a good tenant, leave them where they are and leave the rent where it is."