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Real Estate Western Australia

Perth’s median house price went down in the September quarter while its median price for land went up, according to the Real Estate Institute of Western Australia.

House prices

Releasing its sales data for the months of July, August and September, REIWA President Alan Bourke said the median house price in Perth had dropped to $480,000 on the revised June quarter figure of $500,000.

“The half-million dollar mark seems to be a financial and psychological barrier that many buyers won’t cross under current conditions, so we are likely to see the metropolitan median price bumping around in this price range for the foreseeable future”, Mr Bourke said.

Land prices

In contrast to house prices softening, land jumped by 12.5 per cent in the quarter, moving the median price of a block to $270,000. However, Mr Bourke cautioned against reading too much into this.

“The median price of land has not jumped because of any shortages, in fact there are currently 2,360 blocks on the market. This jump in median price is because there has been an increase in sales of more expensive lots closer to the city and fewer sales at the more affordable urban fringe,” Mr Bourke said.

Units

Units, apartments, villas and townhouses in Perth saw a modest fall in median price of $5,000 to $405,000. Listings and selling days

“The number of properties on the market was up by 7 per cent on June to 15,500 listings, but this is a significant jump of 38 per cent on the same time last year. The number of selling days is mostly unchanged, with sellers experiencing 63 days on market,” Mr Bourke said.

Mr Bourke said the large number of listings made it a buyers’ market with competition from sellers seeing price reductions taking place to secure quicker sales.

Discounting

“Our data show that in the September quarter, almost 70 per cent of sellers were prepared to drop their asking price by 6 per cent to find a buyer,” Mr Bourke said.

Rental market

In Perth’s rental market the vacancy rate has tightened by almost 1 per cent, to 3.4 per cent of available properties for lease.

“This brings the vacancy rate back to more normal levels, but this has more to do with investors selling their rentable stock and diminishing supply, rather than an increase in the number of new leases by tenants,” Mr Bourke said.

The median rent remained steady at $370 per week across Perth for the ninth consecutive month.

The regions

In regional WA, a 2.7 per cent fall in median house price has seen a drop of $10,000 since June to a new median of $365,000.

“Busselton and Greater Bunbury saw the greatest falls in median price of minus 10 per cent and minus 8 per cent respectively. But in an obvious sign of continuing housing pressure in the Pilbara, the town of Karratha grew by a further 3 per cent to new median price of $871,000, whilst Broome in the Kimberley grew by 8 per cent,” Mr Bourke said.

Regional units dropped more sharply by 5.2 per cent, taking $17,500 from the median unit price in the previous quarter.

“Interestingly, while we have seen regional houses and units come down in median price, there has been no change in the median price of regional land with residential lots continuing to sell for around $160,000,” said Mr Bourke.

Population pressure drops

Mr Bourke said the current state of the market must be seen in the context of a 30 per cent fall in the rate of population growth in the 12 months to March.

“Latest Australian Bureau of Statistics population growth figures indicate that despite leading the nation, WA growth rates continue to slide from a peak in March 2009.

“In the year to March 2009, WA saw 73,200 extra people, but in the year to March 2010 this number had dropped to 51,400,” Mr Bourke said.

Mr Bourke said a reduction in overseas migration had been the major contributor to the decline in population growth, but was not surprising given that the Federal government had previously indicated a 20 per cent fall in the migrant intake for 2009-10.

“Interstate migration to WA has also fallen noticeably over the past 12 months, and these declines have had an obvious impact across the housing system, particularly with rental vacancies, first home buyer activity and new housing construction,” Mr Bourke said.

Construction and supply

Preliminary data on new dwelling construction released by ABS recently, show there were 25,200 new dwellings commenced in WA between July last year and June this year.

“This is the third highest number of new dwelling starts over the past 40 years, and was largely driven by the surge in first home buyers last year taking advantage of low interest rates and the Federal boost to assist them,” Mr Bourke said.

Mr Bourke said the significance of the 25,000 new dwellings commenced last financial year, up by 37 per cent on 2008-09, is that it is more than adequate to meet the demand of current population growth.