Perth has enjoyed a slight upturn in property prices for the first time in 18 months, prompting the peak industry lobby to boldly call that the bottom of the market has been reached.
RP Data CoreLogic’s Home Value Index shows a 0.4 per cent increase in overall property prices in November following consistent falls every month since April 2018.
It comes on the heels of a 12.5 per cent fall in value across all sectors of the market over the past 18 months, according to RP Data CoreLogic.
Real Estate Institute of WA president Damian Collins said the data offered a glimmer of hope after the market’s longest, deepest downturn in history, which it had endured for the past five years.
But Mr Collins said continued price growth would be minor, slow and patchy next year, claiming “reasonable” gains were not expected until 2021. “We are on the slow path to recovery,” Mr Collins said.
“People are always asking, when will the bottom come? All things being equal, the sentiment is optimistic that we have bottomed out and will return to moderate growth.”
Mr Collins said the $650,000 to the low millions housing market had enjoyed the strongest rebound, which he believed was due to greater sense of job security and confidence among buyers in this sector.
He predicted the entry level market — where job insecurity and mortgage stress had hit hardest — would continue to struggle in 2020, and would possibly not bottom out until 2021.
He said this sector would ultimately need reasonable population growth to help lure investors back in. He called for an extension of stamp duty exemptions for first-homebuyers purchasing properties up to $550,000, instead of the current $430,000.
Mr Collins blamed the slowing population growth, the crisis in retail confidence caused by the mining downturn and the lacklustre jobs market for the dire state of the market in recent years.
“At one stage we were seeing price drops of one per cent each month,” Mr Collins said. “But in the last few months the reductions have slowed, and these latest figures showing an increase in value reflects what we are seeing on the ground.”
According to REIWA, Perth’s rental market has seen signs of improvement with house median weekly rent prices rising $5 to $370 per week during November. The number of homes on the market was also falling, with 14,400 listed at present, compared to just under 18,000 this time last year. The average days on the market has also improved to 70 days compared to 79 in October.
REIWA will today release its monthly update, based on figures from its research partner RP Data CoreLogic. CoreLogic’s data does not revolve around a median price, like most other sets of data. Instead, it is based on an algorithm which uses recent house sales to reflect overall changes in the market.
REIWA data shows the metropolitan’ area’s median price is still $479,000. The suburb to see the biggest spike in median price for November was Floreat with a 3.1 per cent increase to $1.34 million. This was closely followed by Wembley, Willetton, Clarkson and Spearwood.
Real estate agent Robbie Milligan, pictured with his family, purchased in Floreat in September, at a point that could well have been the absolute bottom of the market.
Mr Milligan said buyer interest had risen in recent months. “I have noticed buyers have gone from being very cautious to there now being a little bit of a shift towards anxiety about missing out of the best market in 30 years,” he said. “Some people are saying, let’s not be too cute about the prices, let’s just get the property.”
This article originally appeared in The West Australian, 2nd December 2019