Rising interest rates and global financial uncertainty are having a tangible impact on Western Australia’s housing industry, with two sets of economic data indicating a downward trend in the local market.
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Rising interest rates and global financial uncertainty are having a tangible impact on Western Australia’s housing industry, with two sets of economic data indicating a downward trend in the local market.
Preliminary data from the Real Estate Institute of Western Australia (REIWA) released last week showed Perth’s median house price fell 2.7 per cent in the March quarter, from $470,000 in December to $457,000.
Housing finance figures from the Australian Bureau of Statistics added to the negative picture, with an 11.6 per cent fall in WA home loans for owner occupiers in February.
This was the biggest fall of all the states, ahead of South Australia (7.4 per cent), Queensland (4.2 per cent) and New South Wales (3.9 per cent).
In WA, a seasonally-adjusted 7,730 loans were issued in February, down from 8,740 in January.
Nationally, demand for home loans fell for the first time in four months, in all states and territories except Tasmania and the NT.
Meanwhile, REIWA’s figures showed an increase in listings of homes and blocks of land, reaching a total of 17,584.
This was up from just 5,000 listings 18 months ago.
Rents for houses and units were up in the March quarter, with the former rising by 1.5 per cent, to $335 per week.
Unit rents were up 3.3 per cent to $310 per week, while the vacancy rate fell 0.6 per cent, to 1 per cent.
REIWA president Rob Druitt said rising interest rates, declining consumer confidence and a record number of listings on the market had contributed to the fall in the median house price, which was compounded by the fact that investors were beginning to leave the WA market.
However, Mr Druitt said the results were slightly skewed by an increase in sales at the lower end of the market and a levelling off at the top end.
Master Builders Association WA director Michael McLean said although finance approval data was volatile, there was a definite downward trend.
“As a lead indicator, it doesn’t augur well for future housing approvals in the industry,” Mr McLean said.
“We’re starting to see the impact of recent interest rate rises. It’s really slowing the industry down, and in six months’ time we’ll see the real impact in a downward trend in approvals.”
He said first and second homebuyers, targeting homes worth less than $500,000, would be most affected, while the top end of the market remained buoyant.
“Until such time as governments and bodies like the Reserve Bank move to make some contribution to housing affordability, this trend will continue,” Mr McLean said.
“I think governments are starting to recognise housing affordability has deteriorated over time, and the market is sluggish to respond.”
Australian Property Monitors, which is yet to finalise its data for the March quarter, is predicting a 3 to 5 per cent drop in Perth’s adjusted median house price, on the back of a 1 per cent drop for the previous quarter.
APM estimates Perth’s median house price is $507,000 at present.
The agency’s general manager Michael McNamara said that, if the median price fell by a similar margin each quarter for the rest of the year, the total fall in price could reach 20 per cent for the 12-month period.