Property market sends mixed signals

While first homebuyers have been active there are concerns low economic growth, a soft job market and low population growth will affect the Perth property market. Picture: Anita McInnes

THERE are mixed messages about the Perth property market including falling house prices, claims the market is high risk and data showing first homebuyers have been very active.

On March 20 Housing Industry Association (HIA) senior economist Shane Garrett said Australian Bureau of Statistics data for the December quarter showed house prices in Perth fell by 1.7 per cent.

On March 13 Mr Garrett said Australian Bureau of Statistics data (released in March) showed the first homebuyer share of owner occupier mortgage volumes in Western Australia had increased by 25 per cent during January.

New home sales in February in Western Australia fell by 9.9 per cent according to the Housing Industry Association’s new home sales report released on March 27.

Mr Garrett said house prices could turn around in a short space of time.

“History shows that house prices eventually grow fastest in the markets which have seen low growth in the recent past,’’ he said.

RiskWise Property Research chief executive officer Doron Peleg said many commentators were tipping Perth as the ‘next big thing’ in the investment property market.

On March 21 Mr Peleg said Perth was attracting a new wave of attention because many investors believed its property market had hit rock bottom and strong capital growth would follow.

“However, while its economy has shown some slight improvement recently, Perth is projected to deliver low economic growth, a soft job market and low population growth,’’ he said.

He said during the past year, the state delivered negative GSP growth of -2.7 per cent and this had a detrimental on the property market.

Moreover, he said the 5.7 per cent (seasonally adjusted) unemployment rate (and 8.95 per cent effective unemployment rate) were reflective of the city’s depleted labour market which was the second highest in Australia after Tasmania.

“Consequently, WA is also experiencing one of the lowest population growth rates across Australia.

“This has resulted in negative price growth for both houses and units across Perth in recent years.

“Unfortunately, while it is likely WA will experience slow improvement to its economy as it continues to adjust to the post-mining era, this improvement is unlikely to result, in the foreseeable future, in solid capital growth.

“The Perth property market has continually delivered negative or poor growth of -7 per cent in the past three years for houses and -14 per cent for units.’’

He said the negative growth rates for both houses and units fell well below the Australian benchmark and showed the dire state of the Perth property market.