The month in review: Perth
By Herron Todd White
The Perth metropolitan area witnessed a 3.9% increase in the median house price during the 12 months prior to October 2014 as sales turnover rose in both the housing and multi-residential sectors. However, the median house price fell 1.8% from the previous quarter indicating a softening in demand generally across the market.
As at January 2015, total listings for the Perth metropolitan region were circa 12,050 (REIWA), an increase from circa 8,500 recorded in June 2013. The statistic is indicative of falling demand, which has ultimately had a negative result on the median house price for the previous quarter. Early indications are that this trend will continue through the December quarter’s results.
Caution will remain the buzzword for 2015. The Perth residential property market experienced strong fundamentals on the back of resource industry backed demand. Perth’s population grew exponentially as a result of the influx of workers from both the eastern states and overseas. With the falls in both iron ore and oil prices, most resource projects are on hold. With no end in sight of a recovery in prices, most companies have begun the task of shedding their workforces. As a consequence, Perth’s population is predicted to fall as workers search elsewhere for work.
Overall there remains uncertainty surrounding the health of the global economy, demand within the resources sector and subsequently the medium term effects this will have on the local real estate market. Continued stability in interest rates may assist to provide some stability to the Perth real estate market through 2015, although we highlight that recent statistics indicate the market to have peaked early in 2014. In isolation and without the further impact of a large scale external economic event, we predict a declining market especially in the lower end apartment market as a result of falling demand and completion of stock already under construction.