Perth’s house prices have continued to weaken in the March quarter, latest figures show, tempting more homebuyers to consider entering the market.
Perth’s house prices have continued to weaken in the March quarter, latest figures show, tempting more homebuyers to consider entering the market.
Australian Property Monitors, RP Data and preliminary figures from the Real Estate Institute of Western Australia all reveal a fall in Perth house prices for the March quarter.
This contrasted with figures from the Australian Bureau of Statistics, which showed that Perth outperformed all the other capital cities, with a house price index increase of 0.5 per cent.
Hegney Property Group founder Gavin Hegney said the ABS figures were inconsistent with the current state of the property market.
“I do not believe that we have had an increase in the market in the last quarter,” Mr Hegney said.
“While some of these agencies use different methodologies, the bottom line is that we are in a buyers’ market and in a buyers’ market prices don’t rise, they fall.”
REIWA also urged caution when reading into the different sets of quarterly data and said official numbers were likely to change as more settlements were received.
“Quarterly data can be volatile and it is easily affected by late sales. For this reason it’s important to be patient and to wait for a good sample size and the later sales data before jumping to any conclusions,” REIWA president Alan Bourke said.
He said REIWA data showed there were at least 15 per cent of settlements in the March quarter still to come in, which were likely to increase the median house price.
“Once this happens, it is likely to push up the median house prices through both volume and composition, given that the more expensive properties take longer to settle,” he said.
The annual figures supplied by all four groups show the weakness of residential property values in Perth.
Year-on-year figures from the ABS showed Perth house prices fell 3.2 per cent for the year, making it the second weakest performing city next to Brisbane, with a decrease of 3.6 per cent.
Focusing on the latest quarterly data, the estimates from the four groups range from an increase of 0.5 per cent to a decrease of 3.7 per cent in Perth housing prices.
APM and REIWA both estimate that Perth’s median house price fell by about one per cent in the March quarter.
APM said this was the third consecutive quarterly decline in Perth median house prices, falling to $540,978 for the March 2011 quarter, compared to $563,850 for the March quarter of 2010.
Mr Hegney attributed the fall in the median house price to the lack of confidence in the market and the expectation that interest rates would increase.
“The sentiment in the property market is below what it should be,” he said.
“In WA, employment is strong and wage growth is there, so those factors suggest that the property market should be increasing, but it’s the fear of interest rate rises and negative sentiment that is holding it back.”
APM senior economist Andrew Wilson predicted the resources boom would see a revival in Perth’s property market by the end of the year.
“The Perth housing market remains subdued with low buyer confidence continuing to constrain activity levels, however, the continuing resources boom should generate a revival in the market by the year’s end,” Dr Wilson said.
APM data showed Canberra was the only capital city to record growth in house prices over the March quarter, with an increase of 0.2 per cent.
Sydney house prices also exhibited some resilience in the face of the adverse market conditions, falling only slightly, by 0.4 per cent.
Mr Hegney said the Perth market would be kick-started because of interest from eastern states buyers.
“Our market is now being eyed by eastern states buyers and there is a perception that the Perth property market will be the next to increase in value in Australia,” he said.
Compared with the one per cent decrease for the quarter reported by APM and REIWA, RP Data showed a more significant decline in Perth house prices, with values dropping by 3.7 per cent resulting in a median house price of $480,000.
Mr Hegney said the greater percentage decrease could be attributed to a drop in value of more expensive properties.
“In relation to the RP Data, I think that the top end of the market has dropped a bit more than the lower end of the market, that (3.7 per cent) figure would represent a bigger drop in the higher value properties,” he said.
RP Data research director Tim Lawless said that while residential property owners might not have seen any capital growth over the past 12 months, many home owners were experiencing increases in rental yields.
Perth experienced a 4.3 per cent increase in rental yield for the March quarter, which Mr Lawless attributed to the tightness in rental markets, combined with flat to negative change in home values.
