Source : the age
Perth’s home values have plummeted over the past six months, with new figures revealing it to be the fastest decline in property prices over the past four decades.
According to Cotality, dwelling values across the metropolitan area are now 8.9 per cent below the record high in April – the steepest decline over a comparable period in 40 years. The only capital city to record a steeper decline was Sydney.
The number of houses sold in Perth also declined by 21.4 per cent, the biggest drop nationally, over the 12 months to October.
And Perth houses spent three times longer on the market when compared to just three months ago, sitting at 28 days on average.
Cotality’s head of research, Gerard Burg, said the downturn in the housing market reflected a build up in pressures on the demand side, including affordability constraints, higher interest rates, cost-of-living – particularly related to energy prices – weak consumer confidence and changes to investor policies in the federal budget.
“Initially, the downturn was led by Sydney and Melbourne, however the longer downturn in these markets has seen more time for an adjustment on the supply side, meaning fewer homes being listed to bring more balance between supply and demand,” he said.
“This process has happened more slowly in markets like Brisbane and Perth, meaning that we’ve seen a large increase in the stock of available homes to purchase.
“The total listings of properties for sale in Perth sat 8 per cent above the five-year average in the four weeks ending November 8, compared with around 55 per cent below average at the end of January.”
Burg said this meant it was now a buyers’ market – but “only because so many potential buyers have been pushed to the sidelines”.
“Those demand side pressures have limited the pool of buyers who have both the confidence and the financial capacity to transact, so those that remain have more choice, more time to consider and more time to negotiate with vendors,” he said.
“This puts downward pressure on home values.”
Burg said for the majority of homeowners, the sizeable increase in home values over the past five years provided a “considerable buffer” to withstand a large downturn.
But for those who purchased close to the peak, the risk of negative equity was heightened, particularly those who did so using the 5 per cent deposit scheme.
“We expect the downturn will continue in coming months and into 2027, albeit the pace of the decline is likely to slow,” Burg said.
“The market is unlikely to turn around until buyers have enough confidence and financial capacity to return en masse, which may require the RBA to commence a rate cutting cycle.
“At this point in time, the earliest that appears possible is the second half of 2027.”
Nationally, home values across Australia’s combined capital cities fell for the seventh consecutive month in October, taking cumulative losses to 8.1 per cent.
The sharp drop leaves the housing market 0.1 percentage point shy of the largest peak-to-trough decline seen in the past four decades.
“This is the fastest decline on record, and we would expect next month it will be the largest overall,” Burg said.
“However there is some way to go to record the largest decline overall in Perth – that was 15.3 per cent from June 2014 through July 2019.”
Holly Thompson is a journalist with WAtoday, specialising in education and the environment.Connect via X or email.
