Property News

Western property prices finally hit the skids

15 January 2007

The brakes have been applied to the runaway property market in Perth.

House prices in the city for the December quarter are forecast to have grown by about 4 per cent compared with about 8 per cent for the September quarter.

The Real Estate Institute of Western Australia will this week announce a median house price for the December quarter approaching $460,000, up from $440,000 in September.

REIWA president Rob Druitt said the slowing was expected given phenomenal price rises driven by the resources boom.

The median house price in Perth rose 38.7 per cent between September 2005 and September 2006. "That sort of growth really is unsustainable," Mr Druitt said.

"I think September was the end of the property boom."

Mr Druitt said that while most suburbs had continued to grow, prices in some outer Perth suburbs had dropped.

"First-home buyers have been left out of the market and that is a concern ... affordability is going to be the buzzword of 2007," he said.

The West Australian Council of Social Service said the slowing property boom would not help those looking for rental accommodation because the rental market would see an influx of people who could no longer afford to buy.

"What we're seeing is landlords increase the cost of rent every month or every three months, because many rental agreements now allow it," WACOSS executive director Lisa Baker said yesterday.

"An increasing median house price in Perth will only exacerbate affordability problems for renters and buyers."

House and rental prices in Perth had increased way out of proportion to wage earnings, WACOSS said.

Rental prices increased by 27 per cent last year against national wages growth of 2.7 per cent, Ms Baker said.

And industry sources expect rents to increase by a further 20 per cent over the next 12 months.

"That kind of increase has a huge impact on people's ability to access housing and accommodation," she said.

Relief for home buyers must be addressed by the state Government in its May budget, REIWA said yesterday, as the threshold for stamp duty relief was set when property prices were lower.

"When that figure ($250,000) was chosen in 2004, 46 per cent of all houses were under that price," a REIWA spokesman said. "Today less than 5 per cent of all homes for sale in Perth fall under that threshold, so something has got to change.

"It's unacceptable that a first-home buyer in WA is looking at paying $18,000-plus stamp duty on a median-priced house."

Mr Druitt said many first home buyers took out larger home loans than they wanted to because they were unable to otherwise pay stamp duty.

"It's very unfair on young people."