The month in review: Perth
By Herron Todd White
October 2009
The end of September will see a reduction in the First
Home Buyers Grant boosts resulting in a reduction
from $21,000 for construction loans to $14,000 and
from $14,000 for established properties reduced to
$10,500. The recent change of policy by Keystart Home
Loans for the requirement of a 4% deposit of the value
of the property rather than 2% will further compound
a softening in the first homebuyers market, particularly
given the strong market share that Keystart Home Loans
have experienced during 2009.
The first home buyers market under $500,000 has driven
the Perth residential property market, which has now
provided a natural shift into other markets including the
second and third homebuyers and investor markets. The
volume of sales is steady as evidenced by the number of
listings in the Perth metropolitan area currently placed
at around 12,000 which is inkeeping with normal market
conditions. This activity clearly indicates that the market
has bottomed out, with good sales volumes also being
achieved in the market over $1,000,000 taking advantage
of the price corrections that Perth has seen in the past
12-18 months.
A concerning area over the past 12 months has been the
City of Mandurah where general property prices have
reduced by up to 30% across the board from the peak
of the market. Whilst the area is showing slight signs
of recovery with reasonable volume of sales, the shear
volume of the market still provides options for prospective
purchasers with the general confidence of the Perth
metropolitan area failing to flow into this region. Whilst
the volume of sales in areas such as the City of Armadale
have been steady, this has been largely due to the first
homebuyer market and, with increases of stock of lowdensity villa type developments throughout the area the
basic economic law of supply and demand may see some
problems occur moving forward.
The recovery of the Perth market may be enhanced further
due to the hype surrounding the State Government’s gas
projects in the north, specifically the Gorgon Project. On
the back of these announcements the consensus is that
the West Australian economy is safe and sound moving
forward. The anticipated resurgence of the mining sector
may compound economic viability further and as a result,
the possible increases of purchase demand and increases
in Perth property prices across the board.
Whilst there is a clear re-emergence of confidence
in WA, it is still unknown what affect possible higher
unemployment rates in other sectors may have together
with likely increases in interest rates in the coming 6
months.
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