Perth Housing News

[vimeo]19521113[/vimeo]A slowdown in house sales and increase in land prices have emerged as key themes from the Real Estate Institute of Western Australia’s release of December quarter data.

House prices

Late settlements from the September quarter pushed the metropolitan median price up to $489,000 for that period, but it dropped back during the December quarter to settle at around $480,000.

REIWA President Alan Bourke said this means that Perth’s median house price is now pretty much where it was three years ago in December of 2007.

“We saw a late burst with sales in the September quarter that pushed up the median price beyond expectations, but REIWA does not expect this to happen for the December quarter. Sales dropped by 30 per cent in the month of December and there was little movement in the distribution of sales across the price ranges,” Mr Bourke said.

Units

The shift in the median price for units, villas, apartments and townhouses in Perth was negligible, dropping slightly from $409,000 to $405,000.

Sales turnover

REIWA’s preliminary data show Perth experienced its ninth consecutive month of low sales turnover at around 30 per cent below the 15 year average. This trend was spread across houses and units.

“We have not seen such a sustained period of low turnover since 1995, however similar low points in March 1997 and June 2008 bounced back over time and turnover has not fallen to the levels we experienced during the recession in the early 90’s,” Mr Bourke said.

First home buyers

“We saw little activity in the market at the end of the year, but this is traditionally the case. Even so, first home buyer activity increased to represent 25 per cent of the market, in line with long term trends,” Mr Bourke said.

The average first home buyer loan has also fallen by about $30,000 from November 2009, as this demographic takes advantage of the drop in prices. The average first time loan is now close to $270,000.

Land prices

REIWA’s preliminary data for the December quarter show the only section of the market with significant movement was with the sale of vacant land.

“Our data show a 21 per cent jump in land price for the December quarter, lifting the median purchase price by $25,000 to $280,000 for a block. However, people should take care not to interpret this as a jump in the overall price of land.

“The rise in median land price is most likely due to a greater number of near-city sales where land is more expensive, coupled with a fall in sales on the more affordable urban fringe. We can expect this median to come down as the cheaper pre-sold lots on the outskirts of the city settle over the coming year,” Mr Bourke said.

Regions

In the regions the median house price remains steady at $370,000, although the decline in turnover was stronger than in the city at around 40 per cent below the 15 year average. Small gains in house prices were experienced in Bunbury, Geraldton, Albany, Esperance and Karratha, while the median land price in the regions lifted slightly by $6,000 to $166,000.

Rents

Rents in metropolitan Perth have increased for the first time in a year. The Real Estate Institute of Western Australia recently reported that the median rent in the three months to January had climbed over the December quarter by $10 to $380 per week.

REIWA President Alan Bourke said the March quarter was traditionally a time when vacancy rates tightened and rents increased due to seasonal factors, such as pressure from university students and families preparing for the New Year.

“We saw median rents go from $360 to $370 this time last year but we didn’t experience any further rises or falls through all of 2010,” Mr Bourke said

The vacancy rate for available rental homes in Perth now stands at 3.4 per cent which is well under the vacancy rate of 4.6 per cent in the March quarter last year.

Mr Bourke said it was unclear if upwards pressure on rents would continue through 2011, but suggested that if sellers were struggling to find buyers some might consider renting their properties for a while, increasing the vacancy rate and keeping a lid on rent increases.