01/11/2016 - 10:17

Slight improvement in Perth home prices

01/11/2016 - 10:17

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Perth house prices were up slightly last month as the pace of growth across the nation’s capital cities showed signs of slowing.

Slight improvement in Perth home prices
Perth's median house price is $482,000. Photo: Attila Csaszar

Perth house prices were up slightly last month as the pace of growth across the nation’s capital cities showed signs of slowing.

Dwelling values in Perth rose 0.8 per cent last month, with the city’s median price at $482,000 according to the latest report by CoreLogic RP Data.

However Perth house prices are still down 1.5 per cent in the three months to October, and 3.7 per cent year-on-year.

Perth and Adelaide were the only capital cities to record a fall in dwelling values over the past three months.

That said, October dwelling values rose by 0.5 for the combined capital cities, down from a 1 per cent lift in September and a 1.1 per cent rise in August.

“In most markets, detached housing is generally outperforming the unit sector as concerns around the higher number of units available for sale in the market dent buyer confidence, coupled with lending policies for unit stock becoming tighter,” CoreLogic research director Tim Lawless said.

A combination of rising prices and stagnating rents has driven average rental yields - rents as a proportion of property values - to new lows nationally.

The gross yield on capital city homes dropped to 3.1 per cent in October, from 3.2 per cent in September, for houses, and to 4.0 per cent from 4.1 per cent for units.

Three years ago, yields were 4.0 per cent for houses and 4.7 per cent for units.

"High values, low yields and a mature growth cycle haven't been enough to deter investors from the market," Mr Lawless said.

Markets where value growth has been slower have higher yields, notably in Hobart where both houses and units are yielding more than 5 per cent.

But yields are lower in the big two markets where prices have been booming, especially for houses.

"The typical Sydney and Melbourne house is now providing a gross rental return of just 2.8 per cent," CoreLogic said in its report.

"Taking into consideration holdings costs, expenses and vacancy, the net rental yield for houses is likely to be closer to 2.0 per cent in these markets."

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