Western Australia's housing market still down over the quarter

The Western Australia housing market took a turn for the worse over the last quarter with broad-based downgrades, according to the latest data from Moody's Analytics

They found, despite support from lower interest rates and the continued strength of non-rural commodity prices, dwelling prices remain in a slump after the mining boom.

The labour market in Western Australia has been comparatively weak for some time, with the growth in employment lower than the national average since 2015.

Plus, average weekly earnings contracted over the year to May, the second worst performance among states after the Northern Territory.

Given the subdued conditions, Moody's Analytics forecast is for the housing market is expected to continue declining in 2019, with the trough not likely until 2020, after which conditions will begin to pick up before a modest recovery in 2021.

Katrina Ell, Economist at Moody’s Analytics said: "Greater Perth’s house values are expected to fall 7.8% in 2019, building on the 1.8% drop in 2018.

"Mandurah is expected to experience the greatest fall in house prices this year, before stalling in 2020, while Perth Inner and Perth-North West are expected to perform the worst in apartments, which will have double-digit falls. Conditions will improve for both in the following year, but prices are forecast to still be below 2017’s in the medium term.

"Median rental values in Western Australia fell more than 20% peak to trough from November 2013 to September 2016, a sign of continued excess supply. Since then, rental values have remained broadly stable.

"A slow recovery in rental value over the next two years will help the housing market recover.

"Perth-North West, encompassing Joondalup, Stirling and Wanneroo, is representative of trends across Greater Perth. While apartment prices will likely remain weak over 2019-2020, house values will fare better, with less of a decline this year followed by a modest recovery in the next."