September quarter figures released
Saturday 2nd DECEMBER 2006
The Real Estate Institute of Western Australia today released its official figures for the September quarter.
The REIWA data shows that despite a slow down in sales volumes along with an increase in listings and in interest rates, strong prices growth occurred across the board.
REIWA President Rob Druitt said that the return to 'normal' market conditions that commenced in the June quarter had flowed through to the September quarter.
"Prices have generally moderated to just over 6 per cent growth in the quarter, however, some regional centres such as Kalgoorlie and Geraldton experienced renewed double digit growth," Mr Druitt said.
Metro houses
According to REIWA, the preliminary median house price for Perth is now $430,000, a jump of around 39 per cent over the last year, or up by $25,000 on the June quarter.
REIWA expects this figure to grow to around $440,000 as further settlements occur.
"While in the June quarter the prices growth was driven by the top and bottom end of the market, this time it's being felt in those middle ring local government areas, such as Stirling, Bayswater, Bassendean, Belmont, Canning and Fremantle," Mr Druitt said.
Metro land
However, Mr Druitt said the most dramatic rise in prices had been in blocks of residential land in the metropolitan area.
"There has been a real explosion in land prices, resulting in a jump of 77 per cent in the year to September, bringing the median price to $265,000.
"That's an increase of $50,000 on the June quarter which is being caused by a huge demand for land and constraints around land release," Mr Druitt said.
The majority of this price pressure has occurred in the new outer areas in excess of 20kms from the CBD where the annual price growth was 84 per cent.
Mr Druitt warned that the big jump in land prices could cause many prospective home builders to look at other options.
"According the Australian Bureau of Statistics, the cost of building a project home grew by almost 16 per cent over the year, and this coupled with a huge increase in land prices in Perth could force many people back into the established housing market or into renting.
"If this is the case, then we could see a new burst of prices growth in established homes in the New Year, as well as some additional pressure on median rents," Mr Druitt said.
Metro units
REIWA figures show that the price of units in Perth grew at a modest rate of 3 per cent for the quarter, down from an exceptional growth rate of 14 per cent in the June quarter, bringing the median price to $335,000.
"This represents very strong growth of 33.5 per cent since the September quarter 2005 apparently driven by affordability pressures.
"This quarter saw most growth occurring in the outer, more affordable areas and the lower quartile of this market has grown by 46 per cent over the last year," Mr Druitt said.
Rentals
Perth's vacancy rate for rental properties has eased a little, lifting to around 2.1 per cent for the quarter, a rise of 2 percentage points from the June quarter. However, median rents continue to climb on the back of population pressures and affordability constraints.
"Rents have basically lifted $10 across the board from the last quarter, bringing the new median rental for a metropolitan unit to $240 per week for units and apartments and $260 per week for houses. This represents an increase of almost 20 per cent over the year.
"It's worth noting however, that the gross rental yield (the gap between the cost of an investment property and the rent it can return), has widened further due to the even greater increases in property prices. This in turn could see some investors withdraw from the market or place further pressure on rents," Mr Druitt said.
Houses sold / Listings / Selling days
In the September quarter 12,150 homes and 2,550 units sold throughout WA, while at the end of the quarter there were 8,829 dwellings for sale.
"Supply has further increased since then and currently stands at around 11,000 homes on the market. This is especially good for the first home buyers who up until now have been competing with eager investors. Thankfully people now have much more to look at and more time to look around in a more relaxed market," Mr Druitt said.
Selling days have stretched out a little, lifting by one day to around 32 days currently, between listing a property and having it sold.
Regional market
Overall, regional WA house price growth slowed to 3.2 per cent in the September quarter after an 8.6 per rise in the June quarter. REIWA's preliminary regional WA median has increased from a revised $315,000 in the June quarter to $325,000 in September.
"Regional WA generally recorded a slowing growth trend, although some places such as the combined Northam Shires (31%), Geraldton (15%), Kalgoorlie (14%), and Broome (11%), all enjoyed double digit growth," Mr Druitt said.
"Greater Bunbury and Busselton also experienced a rebound of 7 per cent although it appears that the adjoining shire of Augusta/Margaret River recorded no growth in the September quarter.
"The Pilbara mining boom has seen the median house price in Karratha grow even further, jumping by 8 per cent in the September quarter to $474,000, equal to Augusta/Margaret River and now second to Broome on $545,000.
"Land prices in regional WA grew by just under 3 per cent, with the median price now $185,000, up by 42 per cent on the September quarter 2005. Sales volumes are down generally, although a surge of 30 per cent was experienced in Geraldton.
"This is in contrast to the significant fall of around 50 per cent in land sales volumes for Bunbury and Mandurah," Mr Druitt said.
Summary
"Overall, it's still the case that prices growth is continuing throughout WA, although the market is much more relaxed and listings have grown significantly. I think many buyers and sellers are just pausing for a while, waiting to see what might happen over the Christmas and New Year period before committing either way.
"But the bottom line is that our growing population, strong economy, good wages, tight land supply and ongoing demand for housing will continue to place pressure on the housing sector and the rental market into the future," Mr Druitt said
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