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Comments from REIWA
For the March quarter of 2008, REIWA recorded a fall in the median house price of around 3 per cent. REIWA President Rob Druitt said the ‘retraction in price was caused by a combination of factors including interest rate rises, a drop in overall consumer confidence and a record number of listings now on the market.’
This should help ease WA’s rental market, which has been experiencing strong rises the past few quarters. Currently, the median rent sits at $335 per week – up 1.5 per cent from last quarter. However, the large number of properties on the market should hopefully also see an increase in the rental vacancy rate as some investors decide to hold their properties rather than sell in a stagnant market.
Affordability and Housing Glut
Consumer confidence and a lack of affordability due to the recent interest rate rises has contributed to a housing glut across Perth. The announcement of stamp duty cuts in the WA State Budget of 15 per cent (or around $3000) from July 1 has also caused some first homebuyers and investors to hold off on purchasing a property.
The slow selling times are most prominent in the ‘southern corridor of Rockingham-Kwinana, Armadale-Serpentine and Cockburn’; these areas made up around 23 per cent of listings in the March REIWA figures. Another 10 per cent of listings were in the Mandurah-Murray region (The West Australian, 24th May).
The most recent HIA-Commonwealth Bank Affordability Report found affordability fell by 2.2 per cent over the March quarter in Perth. This has had an impact on the rental market by ensuring more first homebuyers are kept out of purchasing their own home, with the higher rents also eating into their first home deposits.
Outlook
The current rate of affordability in WA is unsustainable, and a market correction in some areas of Perth is to be expected. In this regard, actions from the Federal Government will have an effect on the market in the medium to long-term. The introduction of First Home Savers Accounts should begin to have an effect in a few years. Also, the introduction of the National Rental Affordability Scheme should encourage large-scale investors and property developers to increase rental supply in the bottom end of the market.
However, the federal Budget has revealed an anticipated 31,000 new skilled migrants next year bringing the total number of skilled migrants to 300,000. With a stated policy of increasing immigration to combat the skills shortage, the future status of affordability in Western Australia remains unknown.
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