• December housing market data points to modest recovery

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    December housing market data points to modest recoveryThe 2011 December Quarter results showed the first real indications of housing market recovery in more than 18 months, according to the Real Estate Institute of Western Australia.

    REIWA President, David Airey, said the median price for both houses and units increased in Perth while only unit prices increased in the regions. Sales were also up and the number of selling days came down.

    “Despite state-wide dwelling sales increasing by four per cent in the December quarter to an estimated 9,600, the annual dwelling sales for 2011 were the lowest in 20 years.

    “However, in positive news the number of properties on the market was down by 12 per cent on the same time last year, the number of sellers who were discounting fell and the average level of discount being offered by these vendors was reduced,” Mr Airey said.

    Mr Airey said that while the upward movement in the median price was interesting, it was the other indicators in the market that were more encouraging.

    “The modest increase in Perth’s median house price is due to the growing numbers of up-grade buyers who entered the market, particularly in the $500,000 to $700,000 price range. 
     
    This has countered the large sales volumes of first home buyers purchasing the more affordable homes and skewing the median downwards in recent times.

    “When you look at all the market indicators together to get a wider picture you can see that buyers and sellers are becoming more confident and things really do look like they’re settling down into a more normal pattern,” Mr Airey said.

    According to REIWA data the metropolitan median house price is likely to settle at around $465,000, up by $5,000 on the September quarter, while units and apartments increased by a modest $2,000 to a median of $395,000. 

    In regional Western Australia, the median house price dipped by $5,000 to $360,000, but the smaller unit and apartment market increased by almost four per cent, possibly due to the composition of sales, and lifting the median for multi-residential dwellings outside of Perth to $330,000. 

    The number of selling days has fallen by four to 77 and the price of land in Perth seems fairly stable, with a typical block costing around $240,000. 

    “The number of listings fell from 14,960 in September to 13,514 in December, which means the oversupply of properties in the market has greatly reduced and almost returned to the long term equilibrium of 12,000 listings.

    “Of course, we need to factor in the sellers who remove their properties from the market over the Christmas holidays and re-list them in the New Year, so we may see the listings swell in the March quarter and I note the increase of 650 properties in January,” Mr Airey said.  

    Mr Airey said the most interesting occurrences to emerge from the December quarter have been with seller sentiment and with the rental market.

    “REIWA’s measure of seller sentiment looks at the number of vendors who are dropping their asking prices to get a sale, as well the actual percentage drop in price. 

    “In the September quarter, some 72.5 per cent of sellers were dropping their price and the average reduction was 7.5 per cent. In the December quarter, the number of discounting sellers had dropped back to 68 per cent, although the average discount remains around seven per cent. 

    “This suggests that more sellers are meeting the market and pricing their properties more realistically to get a sale,” Mr Airey said.

    First home buyers remain active in the WA market, representing around 29 per cent of all sales and up from a more usual 23 per cent of market activity. 

    Housing affordability has improved with prices coming down, interest rates being cut and plenty of stock creating competition among sellers. This has been a stimulus for many first home buyers, which in turn has been of benefit to upgrade buyers who first need to sell their existing dwelling before being able to move on.  

    “Despite this, it seems many people are opting to rent rather than buy, perhaps waiting for clearer signs of the market bottoming out and the general economy improving before they commit to a purchase.

    “As a result, the rental vacancy rate in Perth has tightened to 2.3 per cent and rents for houses increases by $20 to a metropolitan median of $420 per week. Median rents for flats, units, apartments, villas and townhouses remained steady at $380 per week,” Mr Airey said.

    In the regions, only Port Hedland and Carnarvon saw positive growth with 7.6 per cent and 12.1 per cent respectively in the year to December, while Mr Airey said it looked as though the exceptional growth in Karratha may have come to end, with the mining town recording a fall of 4.6 per cent during 2011.   

    “Overall, regional markets went backwards by almost three per cent over last year with some places taking a harder hit than most, including Mandurah-Murray (-6.3 per cent), and the Augusta-Margaret River region (-10.3 per cent).

    Throughout the state the stronger regional markets have been Broome, Carnarvon, Geraldton, Kalgoorlie and Port Hedland, all of which broadly reflect the influence of the mining and resources sector on the housing system,” Mr Airey said.