Perth’s residential property market hasn’t moved much in 2008, and investor in Western Australia can thank the state’s economy for saving them from a significant market correction… so far. However, several industry insiders are predicting a period of declining property values in the nations far west.
Residential real estate values in Perth have begun to plateau and even drop in recent months – but the worst is yet to come, according to the experts.
Residex statistics show that quarterly growth in the three months to March reached 3.82% – however, this figure is slightly misleading, as it was buoyed by strong growth in just one month (March 2008). In fact, negative capital growth was recorded in the three months to February 2008 (-0.1%), and most industry insiders agree that the residential market is likely to enter a correctional phase.
REIWA President Rob Druitt says that Perth Property prices have already shown signs that they’re set to take a dive, caused by a combination of factors, including several interest rate rises and a drop in consumer confidence.
However, he believes that the lion’s share of the blame for price decreases falls on the oversupply of houses being listed for sale.
“Given the flatness in much of the local real estate market following the boom, many investors are withdrawing from Perth property and putting their homes up for sale,” Druitt says.
“This has seen the number of listings grow from around 5,000 to 17,000 in just 18 months, flooding the market with choice and giving buyers more competition and more leverage in negotiating the price.”
Despite the record number of listings, Druitt says he is confident that the pent up demand from would-be buyers would soak up much of the excess stock throughout 2008.
The Perth market as “still riding the wave of the commodities boom”, according to the ANZ Housing Snapshot for April 2008, and this could help property prices to outrun declining values.