REIWA councillor Joe White said 2018 would go down as one of the toughest in his 28-year career, with WA experiencing the longest downward slump in history.
“If you bought ten years ago and sold today you would get what you paid,” he said
“If you bought 11 years ago and sold today you would drop between 25 and 40 per cent.”
The latest REIWA data showed house sales activity in the South-West fell 7.5 per cent over the September quarter 2018 and 15 per cent over the year.
Listings for sale in the region decreased by 6.5 per cent in the quarter and was 8.9 per cent lower than the same time last year.
The median house price increased 1.9 per cent during the reporting period but was down 4.5 per cent over the past 12 months.
White said the surprise was there were some very interesting signs pointing towards a recovery.
“Development sites have sold extremely well, under competitive buying pressure and with a noticeable increase in prices over the last few years,” he said.
“The top end of the market, particularly in Yallingup and Dunsborough, is actually very strong – the near-beach properties are showing improved sale prices and listings in these areas are low.
“Entry level blocks in Dunsborough Lakes continue to sell well and the estate is now out to Simmo’s Ice Creamery, which is its limit, so everything from here forward is infill.
“In two years or so, when the supply of cheap land runs out, we will see a land supply crisis as there will still be the same demand, but no supply.
“Bunbury and Busselton have a less limited land supply framework so they should be OK.
“Old cottages near the beach are being demolished at a faster rate and being re-developed.”
Buyer interest and activity was varied.
“The top-end of the market is Perth and resource-driven,” Mr White said.
“The standard house market is driven by population growth, predominantly from Perth but from all quarters, so with our population growing at a faster rate than anywhere else in the state, we still have growing towns which in itself keeps commerce ticking over.
“The redevelopment of near-beach, old cottages is almost exclusively driven by retirees looking to be on one level, walking distance to town and beach and with little in the way of upkeep to think about.”
Looking ahead to 2019, Mr White was cautious.
While the mining industry was improving and agriculture continued to perform, he said they were highly competitive areas and continued to employ less people per tonne of ore or grain exported.
“The economy is being generally talked up, but to date it hasn’t filtered through, and it has now been ten years since it collapsed,” he said.
“I see a very slow, cautious recovery, but with little in the way of wages growth, the fall- out from the banking Royal Commission, uncertainty over negative gearing and political uncertainty generally it would be a big ask to expect a quick recovery.”
While there may be cause for some optimism in sales, clouds are were looking on the horizon for the rental sector.
Mr White said the rental sector was tightening, and there had been a steady fall in the number of privately owned rental properties due to low rents and no growth.
He said rising interest rates and unemployment, further impacts of tightening up in lending to first-home buyers coupled with any change to negative gearing would see:
1. A migration of people from property ownership to property renters as household budgets get squeezed.
2. A disincentive to invest in new rental stock of all types of property, resulting in a dwindling supply of rental properties and an increase in the demand from lower income families needing to rent.
“I can see a rental affordability crisis on the horizon, and that is really going to hurt people on low incomes, and country families renting a house for several kids in Perth near universities,” Mr White said.