Perth’s median house price could hit $500,000 for the first time at Christmas if its current growth rate continues at 2 per cent a quarter, the Real Estate Institute of Western Australia predicts.
Perth’s median house price could hit $500,000 for the first time at Christmas if its current growth rate continues at 2 per cent a quarter, the Real Estate Institute of Western Australia predicts.
The forecast comes as housing affordability in WA appears to be worsening, with more than 29,000 households in WA currently in mortgage or rental stress, according to the Housing Industry Association.
It also appears to conflict with at least one other major forecaster, Residex, which believes that Perth’s median house price will not rise as quickly during the year and fall short of the $500,000-mark.
REIWA’s preliminary March quarter data, released this week, reveals Perth’s median house price reached $470,000 in the quarter, representing growth of 2.2 per cent and lifting the December median by $10,000.
Despite flattening markets in some Perth outer suburbs, and a modest price drop of $5,000 recorded in Bunbury, president Rob Druitt said the market was in positive territory and could hit a median house price of $500,000 by the end of the year if growth rates remained steady.
“Most activity has been of the higher order and we’ve seen the mid to lower-end go backward in prices. A lot of the decrease is artificial because people are waiting out for tax relief,” Mr Druitt told WA Business News.
“WA real estate was undervalued so clearly we’re playing catch up…we’re approaching the point where the government must step in to keep the market moving.”
REIWA estimates some 14,000 homes were on the market in the metropolitan area at the end of March, up 21 per cent from the 10,900 listings in the December quarter and still well above its average of 12,000 listings per quarter.
Mr Druitt said the average time to sell a house had stretched out to 55 days from 47 days in the December quarter, but this turnover rate would almost certainly improve from July 1, when the rumoured tax cuts in the state government’s May 10 budget were likely to take effect.
Meanwhile, he predicted the rental market would continue to remain steady, bringing welcome respite from the tight rental market conditions experienced earlier in the year.
Perth’s median rent for houses rose 3.7 per cent during the March quarter to $280/per week, while the median for units and apartments remained at $250/per week, taking the overall median rent to $270 per week.
REIWA’s predictions contrast markedly with that of property analysts Residex, who valued Perth’s median house price at $485,887 for the March quarter, down from a peak of $495,299 it recorded in November last year.
Residex’s agent in WA, Hegney Property Group chairman Gavin Hegney, said Perth’s median house price would have hit $500,000 by Christmas had investor sentiment not turned so swiftly across the March quarter and so many investment properties dumped onto the market.
Mr Hegney predicted further price adjustments and a marginal fall in house prices across the board from its current median of $485,000.
According to Residex data, there were 19,416 homes on the market at the end of March, a more than three-fold increase on listings recorded in the month of August last year. “People are seeing some choice now and that sense of urgency has really gone out of the market. Investors do not see the speculative growth in WA and are looking to invest in the eastern states in what is a counter cyclical move,” Mr Hegney said.
Any major correction in the median house price would be thwarted somewhat by the reemergence of home buyers following the May budget as well as the end of certain tax-incentives for superannuation and the pace of rental growth, he said.
