A glut of homes has hit the market in some of the metropolitan area’s outlying suburbs, raising the spectre of tumbling prices.
Information from RP Data shows that the number of dwellings for sale has doubled in the past year in a cluster of southern postcodes based around Rockingham and Mandurah.
In Wannanup and Dawesville, one in four or five dwellings has a “for sale” sign. Other southern suburbs with a glut of real estate on offer include Baldivis, Wellard, Madora Bay, Success and Meadow Springs.
The trend is also evident, but not as pronounced in Perth’s northern suburbs, with Butler and Darch among the areas with a plethora of new listings.
While property analysts remain divided on how the Perth real estate market will fare in the next 12 months, they agreed that a glut of listings could only be bad news for sellers.
On the flip side, house hunters were in a good position to get a substantial discount.
Australian Property Monitors general manager Michael McNamara predicted that house prices in poorer outlying suburbs could fall by as much as 20 per cent in the next 12 months.
“What happens when there is a glut of properties on the market is that vendors have to compete with others to offload their properties and that translates into more discounting,” he said.
“If you look at this on a broad scale, you can’t help come to the conclusion that the Perth market is heading like a freight train towards a correction.”
While the latest APM property report estimated that the price of a typical Perth house had risen marginally from just over $503,000 to $510,254 in the September quarter, the national property analyst warned that soft market conditions would cause a retreat in house prices in future quarters.
Perth’s biggest residential property developer, Nigel Satterley, said prices in many outlying suburbs were already 10 to 15 per cent cheaper than they were a year ago.
“This hasn’t happened for a long time, since about 2000 when we were in a technical recession in WA,” he said. “We have entered a correction and consolidation phase because the market overshot itself. But for first-homebuyers and prudent investors who take a long-term view, this could be a one in 10-year opportunity.”
Mr Satterley said the surge in listings had been triggered by speculators trying to sell after the boom had cooled.
REIWA president Rob Druitt said he stuck to his prediction that the overall median Perth house price would increase by 5 to 10 per cent over the next year, although some fringe suburbs could experience declines of up to 5 per cent.
DAWN GIBSON
I work in the local building industry for one of the major home building players and demand has definitely come off which is probably not a surprise for many. I do believe however that well located property will have good capital growth in the short term (12 months) and the overall market will improve given that the mining industry is going gangbusters (and not likely to abate for quite some time by all accounts) and the WA economy is in excellent shape. Investors here will do well in the long term but speculators will be stung in the short term. Not the best place to buy IPs at present; more bang for your IP dollar elsewhere.
Cheers,
Pud
