Downturn effects felt in property sector

WESTERN Australia's property market was a vastly changed landscape in the latter half of financial year 2008, as the boom came to an end and the global financial crisis began to unfold.

In the residential sector, a relatively strong six months to the end of 2007 helped cushion the slowdown this year, with Perth's median house price ending 2.2 per cent down in the 12 months to the June quarter.

Prices peaked in the December quarter at $472,000, before sliding to concede 6 per cent by the middle of this year.

The latest preliminary figures from the Real Estate Institute of WA show the situation worsened again in the September quarter, with the median hitting $426,000 - 10 per cent lower than at the end of 2007.

Prices in regional areas have also fallen, with the Mandurah/Murray region experiencing the biggest slump (10.1 per cent) in the year to the June quarter.

Greater Bunbury was also down 6 per cent, but Kalgoorlie/Boulder bucked the trend with a 14.6 per cent increase.

Meanwhile, strong demand for office space pushed the vacancy rate in the Perth CBD to a record low of 0.3 per cent in July, while West Perth became the tightest office market in the world, with a vacancy rate of zero.

The flow-on effect on building tenants was significant, with prime CBD rents hitting $900 per square metre and A-grade space reaching $850/sqm.

Investment sales of CBD office towers slowed markedly with the onset of the global credit crunch; just six major transactions were completed this calendar year.

GE Real Estate managed to offload three of its prime assets - 251 Adelaide Terrace (for $35 million), 30 The Esplanade and 160 St Georges Terrace (each fetching $40 million).