Perth sales drop but first home buyers active at affordable end

The Real Estate Institute of Western Australia released its property results from the September quarter last week and there were three clear trends to be found among the data.

The most noticeable trends are the drop in sales turnover, strong but declining first home buyer activity and the narrowing of most sales into a particular price range.

Sales drop

The REIWA analysis show the number of metropolitan sales dropped away by around 6% in the quarter with 10 of its 13 weeks being below average for turnover this year.

In fact the more affordable north-east and south-east corridors in metropolitan Perth were the only sub-regions to show an increase in activity.

The sales of units and apartments remained steady across the board, but house sales dropped away.

First home buyers

First home buyers were very active at the more affordable end of the market and in combination with softening activity at the upper end, Perth’s median house price came down from $525,000 in June to $505,000, but is expected to lift to $510,000 once all settlements are in.

There was evidence to suggest that the first home buyer activity is seeing some multiple bidding on more affordable homes and resulting in many sale prices that are above the asking price.

The Office of State Revenue reported that the median purchase price for first home buyers across WA for both August and September was $435,000, up from $400,000 on the same time last year.

Units, stock levels and price range

Units, apartments and villas saw a very modest drop in median price across the state, dipping by $4,000 in both the city and the country to $421,000 and $306,000 respectively, but the broader theme from the quarter was the narrowing of the overall buying range.

The distribution of house sales in Perth by price range reveals the compressed nature of the market. Some 75% of turnover occurred within the band of $350,000 to $800,000 and which compares to 71% of turnover in the same bracket this time last year.

The stock of listings for Perth dropped by 1% to 8,700 properties but this was well down by 16% on last year. The tight supply is also reflected in the average number of selling days dipping by just one day to 48.

Bounce in October

Since the September quarter REIWA’s member data is showing a 9% lift in sales activity in October with an increased share in the central part of the Perth market.

The 15% increase in more expensive near-city sales has subsequently pushed the median price up by 1.9% to $520,000 for the three months to October. There has also been a 7% lift in listings during the month.

Rents

In the metropolitan rental system the vacancy rate tightened a little to 3.1%, but this was above average and as a result and the median rent had come off by $5 to around $470 per week across the board in the September quarter.

This change is more strongly reflected in units and apartments which have dropped $10 to a median of $450 per week.

Since the September quarter we have seen a further dip in properties available for lease but more notably a further drop in the median rent to $465 per week.

The regions

In the regions the two main themes emerged from the data; that sales turnover is holding up through the south-west, including Mandurah, Bunbury and Busselton, and that rents in the Pilbara continue to fall.

Broadly, the median house price across the state showed no change over the last three months and is steady at $375,000.

In good news for the Mandurah region the number of sales dropped by around 10% and the median price looks to have cooled by about $5,000 to $390,000, but this is still a good result for the region with turnover sitting comfortably at its 15 year average.

And in positive news for Bunbury, sales turnover reflected stability with the number of listings trending down 15% in the quarter while the median price looks to have lifted 1% to around $380,000. This is its best result since December 2009.

Kalgoorlie-Boulder saw very flat turnover ticking along at 35% below its 15 year average and with the median price dropping by at least 2% to around $338,000.

More notable in the goldfields is the rapidly cooling rental market. The number of available leases jumped 19% in the quarter and 170% over the year while the median rent dropped 5% in the quarter to $390 per week.

In the Midwest, Geraldton-Greenough saw a healthy boost of at least 30% in sales, however its median price is unchanged at $379,000.

Pilbara downturn

In the Pilbara, Karratha remained very subdued in the quarter with little movement in sales or price. Its median is sitting at $679,000 and listings increased by 22%.

Rents there continued to slide, down by 8% on June to $1,100 per week and well down by 19% on the year.

Sales in Port Hedland also dropped significantly in the quarter but late sales data may adjust this. The median looks to have fallen by around 9% on REIWA figures, which would put it at about $818,000.

As with Karratha, the more interesting development in Hedland is with rents. These plummeted by 10% in the quarter to $1,300 per week, down by 35% same time last year.

These are still huge amounts to pay for weekly rent, but there are clear signs the mining sector is winding back with jobs and this impacts directly on the housing market in mining towns.

This article was originally published on reiwa.com.