The Real Estate Institute of Western Australia (REIWA) has released its December quarter property statistics, which suggests Perth’s housing market may be seeing some ‘green shoots’. Below are the key charts:
As you can see, there’s been an improvement across most measures, which has prompted the REIWA to declare the bust over:
“The Perth market found its floor and stabilised in the back half of 2017,” said Hayden Groves, president of REIWA. “We now appear to be entering a recovery phase, though REIWA remains cautious about expectations of rapid growth in the next 12 months.”
Perth’s preliminary median house price increased by 1.2% to $516,000 in the December quarter. Once all sales have settled, REIWA expects the final December quarter median to hit $520,000, a notable improvement from the September quarter median of $510,000.
“On an annual basis, the Perth market is very stable. We’ve observed consistent price levels between the December 2016 and 2017 quarters which is a strong signifier the market has turned a corner,” Groves said.
The median unit price for the December quarter was $405,000, a 1.3% increase from the September quarter.
“It’s encouraging to see Perth’s house and unit medians increase over the quarter because it suggests one sector hasn’t recovered at the expense of the other,” Groves said…
There were 4,946 dwelling sales in Perth in the December quarter, with the figure expected to lift to 6,700 once all sales have been settled. This is significantly higher than the September quarter sales figure.
“Traditionally, the September quarter outperforms the December quarter, but that wasn’t the case in 2017,” Groves said. “The December quarter is on track to record 14 per cent more sales than the September quarter.”
Domain (formerly APM) also recorded price growth over the December quarter for both houses (+0.5%) and units (+1.0%):
Whereas CoreLogic shows a resumption of falls following a period of stabilisation:
Perth’s rental data is also mixed, with the Domain recording flat rents in the December quarter for both houses and units:
The ABS’ rental inflation data also showed falling rents in Perth over the December quarter:
Last October, the MB team traveled to Perth and were shocked by the sheer number of development sites that were half-built, the number of apartments that appeared to be sitting vacant, as well as the volume of apartments that were still under construction. Flying in from the East exposed vast tracts of half-developed housing estates reminiscent of the Irish and California housing busts.
What we saw accorded with the ABS’ dwelling construction data, which shows that supply has been running way ahead of demand (population growth) over the past few years:
As well as the ABS’ property data series, which shows that the net addition of dwellings in WA is running way ahead of population growth:
From the first chart above, there were 19,021 dwelling commencements in the year to September 2017 versus only an 21,403 increase in the state’s population.
And from the second two charts, there were 22,400 net additions to WA’s dwelling stock in the year to September 2017, versus only an 21,403 increase in the state’s population in the year to June.
Therefore, while the Perth’s housing market may (or may not) have bottomed, we do not see much upside given the market will remain heavily over-supplied for the foreseeable future.
