House prices in Greater Perth forecast to fall 2.8% in 2019: Moody's Analytics

Mixed results out of Western Australia’s economy have coincided with continued weakness in its housing market, which is expected to cool further in 2019, according to the latest report from Moody's Analytics.

The report found that the labour market in Western Australia improved, with the unemployment rate falling in October to 5.4%, still a tick above the nation’s average, while the state’s wage growth is among the lowest in Australia.

Greater Perth’s home values fell -4.4% last year and is set to continue that trend into 2019 with a decrease of -2.1% in house values and -2.8 in unit values.

However Moody's Analytics is predicting a turnaround in 2020 and is forecasting growth of 3.3% for both houses and units.

Mandurah is forecast to have the highest reduction in apartment values of anywhere in Australia in 2019, -14%, while houses will see value reductions of just -2.4%. 

In contrast Mandurah is predicted to have the biggest increases in WA in both houses (7.8%) and units (4.8%) in 2020.

Inner Perth is the only region in WA whose house prices have come off the back of a year of growth and is forecast to grow a further 4.7% in 2019.

Unit values however are set to decrease 4.3% in 2019.

Perth North East will have the highest reduction in house values in 2019 at -8%, while apartments will remain relatively stable losing only -0.1%.

It is the only region that houses wont experience price growth in 2020.

Perth North West will have reductions in house values of -0.1% in 2019 and reductions in apartment values of -3.3%, according to Moody's Analytics.

Both houses and units in South East Perth will experience value reductions in 2019 with house values decreasing by -4.6% and unit values decreasing by -4.1%.

South West Perth is the only WA region forecast to have an increase in unit values of in 2019, 4.7%, while house values are decrease by -5.4%.

In Bunbury house values are forecast to fall by -6.3% in 2019 before making a recovery in 2020 of 2.4%.

The housing market in Western Australia is not expected to recover until 2020 as discussed, and values are not expected to surpass their 2015 peak through the next five years.

Although the housing slump is expected to continue, population growth in Greater Perth and Western Australia has stabilised after falling sharply from 2015 to 2016, despite sizeable outward interstate migration.

Rental values fell more than 20% peak to trough from May 2013 to November 2017, a sign of continued excess supply.

During the fall, building approvals also slowed significantly.

Since then, rental values have remained broadly stable.