Seven signs a Perth market downturn is nigh: David Airey

The Real Estate Institute of Western Australia’s (REIWA) latest figures have Perth’s median house price lifting 1% over the September quarter to $548,000.

However, REIWA’s president David Airey warns a downturn should be expected in 2015.

While the median price is up by a small amount, sales turnover is now at its lowest level in two years, with listings for sale trending upwards fast while rents fall. This spells bad things for property owners over the next year, says Airey.

Here are the Real Estate Institute of Western Australia's signs a downturn is coming:

1. Turnover for Perth houses sits 12% below average.
   
   
2. There were 10,250 listings in the September quarter.
   
   
3. House price growth is currently moderating – up only 1% over the September quarter.
   
   
4. Average days on market up by two days, to 59.
   
   
5. Number of vendors dropping their asking prices increased from 48% to 51% (with an average price reduction of 5.3%).
   
   
6. The rental market’s number of properties for lease did soften (now at 5,711), however this is almost 50% up on September 2013. The vacancy rate is at 4% and it takes owners an average of 33 days to find a tenant.
   
   
7. Rents have softened across Perth – house rents are down $10 to a median of $450 per week. Apartments, units and villas dropped by $15 to a median of $430 per week. This is down 4.3% on last year.

Source: REIWA

There is some good news. Airey points to turnover for units, apartments and villas up 7%, despite early Landgate data pointing to a 3.3% fall in median price to $435,000. Regional areas also bucked the downturning Perth trend, with turnover unchanged over the quarter.

First home buyers may be making a small resurgence, with an increase in turnover in the price sectors below the median price – a typical first home buyer activity spot. The Office of State Revenue noted that as of September, the median first home buyer purchase is now at $432,00 compared to $456,500 in July.

“This is good news for first home buyers on one hand, but it also shows they are becoming harder to find in the established home market,” Airey said.

Across the city, investors need to be astute and look for signs of change ahead, said Airey.

“The extent to which the low level of sales, increase in listings, soft rental market and low consumer sentiment might influence the housing system in the longer term may become apparent in the December quarter,” he said.

“Perth’s equilibrium for listings in a balanced market is around 12,000 and indications are that we will clearly surpass this in 2015 which will add to selling days and put downwards pressure on price.”