Western Australia’s residential property market has come off the boil, sending Perth’s median house price down to $446,500 in the June quarter, according to preliminary figures of the Real Estate Institute of WA.
Western Australia’s residential property market has come off the boil, sending Perth’s median house price down to $446,500 in the June quarter, according to preliminary figures of the Real Estate Institute of WA.
The median price experienced a modest drop of 3.8 per cent in the June quarter on a March quarter median of $464,000, as the affordability factor took hold.
The quarter also marked the re-emergence of first homebuyers, with loans up 22 per cent in the June quarter compared with the previous quarter, following recent changes to stamp duty.
REIWA president Rob Druitt told WA Business News there had been some rationalisation in the market, which had forced prices to level out.
In the regional housing market, the median house price slipped 2.7 per cent to a new median of $355,000.
“Over the year to June 2007 we had 12.5 per cent growth in prices mostly from the tail end of the period,” Mr Druitt said.
“We’re seeing a lot of sales in lower-priced areas. Prices have levelled out but the market is still competitive.”
Mr Druitt expected the dip in Perth’s median house price between March and June quarters to tighten to 2 per cent, and the final June quarter median to settle at around $455,000.
But he expects growth in the median house price over the next 12 months of between 5 per cent and 10 per cent.
Perth unit/apartment prices are also expected to climb during the period, following a steadying of median unit prices in the June quarter at $360,000.
Hegney Property Group executive chairman Gavin Hegney said it was almost misleading to talk about the overall market, when price adjustments were happening in different areas.
“Everything went up in 2006 and not everything went up in 2007. It was probably more extreme in 2006,” he said.
“What we’re seeing is price adjustments in different areas and a change in people’s expectations.”
Mr Hegney said the market had returned to a more normal eight-week selling period and he expected single digit growth in the median house price over the next 12 months.
“I don’t believe we’re in an overvalued market. This market should be at 15 per cent per annum growth, but because market sentiment is below the fundamentals, we will see single digit growth,” he said.
In the rental market, Perth’s vacancy eased to 2.1 per cent in the June quarter according to REIWA, while median rents for the metropolitan area rose to $300 per week for houses and $280 for units/apartments.
Building activity, meanwhile, remains strong despite dwelling commencements entering a downward cycle.
Australian Bureau of Statistics figures for the June quarter show new home starts in WA fell 6.6 per cent to 5,707 starts, a result 20.2 per cent lower than the corresponding period in 2006.
Over the 2006-07 financial year there were 24,560 home starts, 4.6 per cent less than in 2005-06.
LandCorp chief executive Ross Holt said the agency was planning to more than triple the production of new housing lots this financial year, to help make new housing more affordable.
REIWA figures indicate the price of metropolitan land stabilised in the June quarter, with a median block now costing $265,000, a 26 per cent increase over the year to June.
Mr Holt said its development expenditure in Perth and Peel was forecast to rise to about $200 million this financial year from expenditure of $40 million in 2004-05.
As a result, LandCorp was expected to produce 900 lots this financial year, compared with its 240 lots in 2004-05, he said.
In regional areas, LandCorp’s development expenditure in WA has increased more than 13 fold from $13 million in 2004-05 to $170 million in 2007-08, equating to an increase in lot production from 133 lots to 1,300.
“We are not contemplating a reduction in activity levels…the so-called boom or step lift in activity will be with us for some time,” he said.
Mr Hegney said solid employment fundamentals remained a strong driver of housing demand in WA, with the situation standing at 1.3 unemployed people per job vacancy, compared to four people per job vacancy in Victoria.
