It’s fast becoming “pass the popcorn” time for Perth property.
RP Data’s daily dwelling values index for Perth shows that dwelling values are declining at an accelerating rate, down 6.6% so far in 2015:
As shown in the next chart, the rate of loss has also been accelerating, with smaller up-weeks and larger down-weeks recorded since the start of the year:
The next chart, which plots annual dwelling price growth on a 14-day moving-average basis, in order to smooth volatility, also shows that the rate of price decline has accelerated over the past month, breaking below the established trend. This suggests that Perth’s housing market is turning pear-shaped fast:
Of course, it’s not just dwelling prices that are falling, asking rents in Perth have also plummeted by 3.3% (houses) and 4.2% (units) over the quarter, by 7.2% (houses) and 7.7% (units) over the year, and by 22.2% (houses) and 19.1% (units) over the past three years, according to SQM Research:
These rental falls, of course, come on the back of a large jump in rental vacancies across Perth:
The bust has only just begun, however, given population growth is plummeting at the same time as dwelling construction is ramping-up:
It’s obvious from the above that an epic glut is approaching for Perth’s housing market, which is wonderful news for renters but terrible news for landlords, especially those whom are highly leveraged.
We also must not forget that Western Australian mining investment will crash over the next two years as its giant LNG projects – Gorgon and Wheatstone – are completed, along with the Royal Hill iron ore mine:
Mixed together, we have the ingredients for full blown housing crash in Perth.
Avoid the temptation to “catch a falling knife” in the pursuit of a faux “bargain”.
