In this week’s report on the real estate industry, Tracey Cook examines trends in the residential property market.
PERTH’S median house price of $194,00 for the December 2002 quarter marked an increase of 13.2 per cent on the previous year and was the largest annual growth since 1994, according to Real Estate Institute of WA.
Median land prices in Perth are up by 12.6 per cent on the year before and the rental market continues to remain stable with no change in overall rent levels, the institute says.
These figures are music to real-estate agents’ ears and go some way to steadying the nerves of property investors who are watching out for the predicted east coast property market downturn.
The residential property market will continue to be regarded as a safe haven for Western Australian’s hard-earned dollars for some time to come unless interest rates rise sharply and there is a lift in the equity market, according to Property Council of WA executive director Joe Lenzo.
Mr Lenzo said that, while the Perth residential market was quite strong, huge price increases were unlikely and there would be a general steadying of prices.
“I expect in the next 12 months there will certainly be a flattening out of the market, but I don’t think prices will be going down,” he said.
“There is still good money available for good properties.
“Property is still a good investment, provided it is good stock.”
In the December 2002 quarter REIWA recorded the Homebuyer Confidence Indicator (HCI) for Perth at 70.2 per cent, down from the mid 2002 high point but up on the long term average of 56 per cent.
In the same period, 12,500 established homes sold, down by 6.4 per cent on the year before. REIWA believes the decrease is mainly due to the low level of property stocks.
A March 2003 report by independent property advisers Herron Todd White states that Perth’s broader residential owner/occupied housing market appears to be slowing down, particularly for properties in the mid price range, with extended selling periods and reduction in asking prices becoming common. However, this did not reflect large percentage falls in values.
Herron Todd White managing director Garrick Smith reported that investor confidence appeared to be firm, predicated on the underlying strength of the local economy together with the more moderate growth in values than was experienced on the eastern seaboard over the preceding few years.
Mr Smith said the performance of the east coast market had a large influence over the WA market, particularly with regard to nervous investors who assumed that any downturn in Sydney or Melbourne would have immediate effect in Perth.
“Some investors are getting more knowledgable that the markets are not intrinsically linked,” he said.
“It is still often the case that they sneeze over there and we get a cold over here.”
The organisation anticipates that activity levels will remain subdued of the first quarter and increase throughout the remainder of the year.
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