07/01/2019 - 12:51

Reports offer contrasting outlook for Perth home prices

07/01/2019 - 12:51

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Fresh forecasts have delivered a mixed outlook for Perth residential property in 2019, with CoreLogic-Moody’s Analytics predicting another year of median house price declines, while Domain expects the Western Australian capital to be Australia’s best-performing city.

Reports offer contrasting outlook for Perth home prices
Domain says improved economic conditions in WA should drive modest house price gains in 2019. Photo: Attila Csaszar

Fresh forecasts have delivered a mixed outlook for Perth residential property in 2019, with CoreLogic-Moody’s Analytics predicting another year of median house price declines, while Domain expects the Western Australian capital to be Australia’s best-performing city.

CoreLogic and Moody’s’ Fourth Quarter Housing Forecast report, released today, flagged a 2.8 per cent decline in Perth home values over the next 12 months, rebounding in 2020 on the back of revived population growth.

The forecast showed dwelling values were predicted to fall by as much as 6 per cent in Melbourne and 3.3 per cent in Sydney in 2019, as tight credit conditions and high levels of new supply negatively affect those markets.

Adelaide was tipped to be Australia’s best-performing capital by CoreLogic-Moody’s, with 2.6 per cent growth flagged, while Brisbane property values are expected to gain 1.2 per cent in 2019.

Domain’s 2019 forecasts painted a sunnier picture for Perth, predicting a 5 per cent gain in median house prices - the largest of any Australian capital.

“Perth property prices have fallen for a number of years following the end of the second stage of the mining boom,” Domain economist Trent Wiltshire said.

“Our outlook is for prices to turn around and grow modestly for the next couple of years.

“This outlook is underpinned by better economic conditions; new mines are being built, commodity prices are higher, population growth is increasing and employment prospects have improved.

"However, not all signs are positive, with home-loan approvals continuing to trend downwards, market sentiment still weak and tighter lending conditions weighing on prices.”

Domain’s report tipped a 4 per cent rise in Brisbane, 2 per cent lifts in Adelaide and Hobart, a flat market in Sydney and a 1 per cent decline in Melbourne median home values for the year.

Mr Wiltshire said that, overall, Domain expected house prices to fall across the country in the first half of 2019, before exhibiting modest growth in the second half of the year.

“Solid population growth, low unemployment and low interest rates will underpin Australian property price growth in the medium term,” he said.

“More restrictive lending conditions will continue to weigh on prices in the immediate future, but eventually, borrowers will begin to adjust to this new normal and lending will begin to grow again, although at a modest pace.”

Meanwhile, the Urban Development Institute of Australia has also released a positive forecast for Perth property, saying a market upswing was likely to occur within 12 to 18 months.

UDIA WA chief executive Tanya Steinbeck said the institute had tracked the impact of mining exploration spending on dwelling commencements, revealing a clear relationship between the two sets of data.

"We have noted that there has been a distinct two-year lag between an uplift in mineral exploration expenditure and a corresponding uplift in dwelling commencement figures in WA," Ms Steinbeck said.

"Therefore, based on the current mineral exploration expenditure figures, UDIA estimates the next market uplift will occur in the next 12 to 18 months.

"Based on our broader market cycles research, we can also expect that the next peak in dwelling commencements across the state to occur between mid-2020 and 2022."

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