Perth Property Prices Dropping

The continuing mining boom and related job opportunities fueling net immigration to Western Australia isn’t stopping the state’s property prices dropping reports the Real Estate Institute of Western Australia.

WA house prices peaked at the end of 2007 when the Perth median price reached $475,000, prices have now dropped to $446,000.

Australia Property Monitors, report that Perth’s median house prices fell 2.8% in the three months to June - the largest fall of any capital. All other capital’s also saw price declines, with the exception of Adelaide.

REIWA data for June shows the largest drops where for the southern Perth suburb of Mandurah and Bunbury region, in the south-west both of which fell by 7%.

There a lot more properties are available for keen buyers with 17,000 properties on the market, up from the normal winter average of 13,000. This points to the cause of the price drops: its not a lack of demand, its over supply. From 2001 to 2007 there was a a huge wave of speculative building; from homeowners subdividing their suddenly valuable larger blocks, to builders developing larger projects.

The over supply is starting to reflect in the rental market. Houses that aren’t selling are being rented out instead. As recently as last summer the media were full of stories of families camped out in friend’s garages because they couldn’t find a property to rent. Now the rental vacancy rate has gone to 3% - a more normal figure. Rents still went up $10/week in the June quarter though with a median of $350/week for a house and $320/week for a unit.

The economic forecasting house BIS Shrapnel are predicting poor growth through to 2010, when the increased demand and wage growth should start to see property prices on the up again. So as normal the only people who really loose out in property are the ones who try to do do the short term speculation, and the developers. Buy a property for long-term capital growth or rental return and you won’t go far wrong.

Photo Credit:midlife travel