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Rise in Perth house prices tipped

A research collaboration between CoreLogic and ratings agency Moody’s has predicted a turnaround in Perth’s depressed property market this year, with a 2.8 per cent rise in detached house values foreshadowed.

However, the report suggests while conditions are improving, there is still a long way to recovery as the drag from the mining downturn slows.

The CoreLogic-Moody’s Home Value Index forecast detached home prices in Perth to increase by 2.8 per cent in 2017, after falling 4.1 per cent last year.

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Comments

O'Connor
Every property owner would love to see the predicted rise.

Perth
Doesn't make sense, everything is pointing to a slump economy, so how could the house prices in WA rise? There'll be more job losses in the coming years and less government spending on projects, which will nullify the effect of reduced supply of houses.

Martin
Property prices have many push-pull factors and it is very difficult to understand what is going on and why. No-one, despite what they say, has a full grasp of the dynamics - only a vague approximation. Perth is a unique market, but what ultimately drives property prices here is migration flow in and out of the state, and investor sentiment - the demand and supply for housing. The health of the economy is significant because this affects migration flows, and so are financial factors such as the availability of credit, interest rates, negative gearing, capital gains tax, deposit requirements, stamp duty and the like. Land supply is also significant, as is the lead time to build new housing stock, which in Perth takes five times longer to build a detached dwelling than in Melbourne. However, the demand for housing from investors, where people are using negative gearing to buy houses, as well as international and interstate migration movements, are the main drivers. In short, migration outflows are falling. The prices of homes are excellent in comparison to the eastern states, which means it's becoming more attractive to investors and interstate migrants. People are hanging onto their homes despite the defaults, and prices have fallen as far as people are prepared to let them. Mining export volumes are picking up, which means money for the government. This new government has its work cut out but if it succeeds, people will come here (which translates into increased property prices). The eastern states are becoming more and more unattractive to live in despite claims they are among the 'world's most liveable cities'. Traffic is at gridlock, people are travelling two hours to get to work. Public transport is at breaking point. Housing costs are astronomical. Wages are flat. Quality of life is not comparable to here. Prices have already turned the corner in Perth. Next year will there will be good increases in the 'value' suburbs, which will affect the broader Perth statistic. When people see prices going up, sentiment picks up and demand increases. It's all good news for Perth. In a final note, always be careful of statistics; Orange Grove showed a 45 per cent increase in property prices in the 12 months leading to June 30 based on one sale.

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