PERTH’S property market is in the midst of its longest decline in the past 30 years and will take some time to recover, according to CoreLogic.
The local industry is more optimistic.
In the release of its May data, REIWA president Hayden Groves said rapid house price growth was not expected this year but neither were substantial declines.
“REIWA expects house and unit prices to remain fairly stable for the remainder of the year, however provided the WA economy remains on this path of recovery and consumer sentiment continues to build, we should start to see genuine improvements in price during 2019,” he said.
The current downturn has seen median dwelling values fall 10.8 per cent in 45 months, down from their peak of $529,083 in 2014 according to CoreLogic data.
This could continue, with the latest ANZ Australian Housing Update forecasting another two years of declining values, estimating prices to fall about 3 per cent in 2018 and a further 1 per cent in 2019.
ANZ senior economist Daniel Gradwell said Perth was getting close to a turning point, with the WA economy starting to improve, but weak population growth and high vacancy rates were still having an effect on the housing market.
“We think this will keep the market in negative territory for a bit longer, although the pace of price falls is likely to be less than over the last couple of years,” he said.
The ANZ is predicting two interest rates hikes in 2019, which may also negatively affect the Perth market.
“If rates rise next year as we expect, that’s going to affect people’s mortgage payments and borrowing power, which will translate into weakness in prices,” Mr Gradwell said.
The Perth market has experienced six downturns since 1989, and while the current decline is the longest, it is not the most severe.
The short-lived downturn between 2008 and 2009 recorded the greatest fall in values with a decline of 11 per cent in 13 months before starting to improve.
CoreLogic’s Cameron Kusher said he believed Perth was close to the bottom of the market and further significant falls were unlikely, but it would be a while before values returned to 2014 levels.
“The rebound following the decline is typically faster than the decline,” he said.
“However, given how long values have fallen for and how lending policies have tightened, I would expect it will take some time for values to return to their previous peak.”