The Perth property market was generally flat by the end of 2007, and despite small gains to be made in regional WA, experts are warning that 2008 will bring more of the same.
The real estate market in Perth has entered a flat phase with property values growing by just 0.40% in the three months to November 2007 according to Residex. In country WA, however, property values are growing at a higher rate of 7.61% to $377,000.
Save the prestige suburbs and those areas fronting water, Braxton Chase CEO Andrew Donnelly expects the market to remain flat throughout 2008.
“That’s the good news. The bad news is that some sub-markets have entered a phase of correction, meaning prices in many suburbs are dropping, particularly in outlying regions,” Donnelly says.
“The market is constrained by unrealistically high levels of affordability which is keeping principal buyers away, and low yields that are a turn off to investor buyers.”
Real Estate Institute of WA (REIWA) President Rob Druitt also believes that the market is under pressure, adding that the RBA's decision to lift interest rates again in November last year has done nothing to rejuvinate buyer interest. The rate rise was “unwelcome in the WA market”, Druitt says, “as things were just starting to pick up again after the boom.”
However, he does concede that it will assist investors in recouping a higher yield.
"Typically, a rate rise will see owners and investors pass on the additional cost to the tenant through rent increases, however this will depend on whether or not the current market will support it,” Druitt says.
"There is lots of available stock for rent. Owners may find it difficult to increase rents now that it's more of a tenants' market, but only time will tell."