The mining boom may be past its peak but it has not stopped the Perth housing market setting a new price record.
The Real Estate Institute of Western Australia says a boost in sales close to the city has raised the median house price to around $535,000.
That has bucked the national trend with a widely-watched private survey showing property price gains slowed in November.
David Airey, the president of the Real Estate Institute of WA, says Perth’s previous highest median price was $525,000 in the June quarter.
“If you’re a home buyer, that is you haven’t bought yet, you’re probably looking at this and thinking what is going to happen, when will I find enough money to purchase a property,” he said.
“But for those that have bought, I guess those people will be very happy that they’ve invested in the Perth property market.”
Mr Airey says the median house price is now higher than it was during the mining boom.
“In fact, the peak during the mining boom was $515,000 so that’s well above that.”
RP Data says Perth and Sydney are the only two capitals where homes are selling for more than their previous peaks.
Low interest rates attracting buyers
Mr Airey says there has been a solid increase in sales close to the city with low interest rates raising buyers’ appetites.
And, first home buyer activity is also strong.
Home prices lose momentum
After months of exceptionally strong gains in several cities, capital city home prices lost some momentum in November, writes Michael Janda.
“The reality is you can get a fixed rate mortgage or a variable rate or a very good mortgage well under 4 per cent at the moment,” he said.
“It’s enabling people to meet the repayments more easily than they were when rates were a lot higher.”
The increase worries social welfare groups with the Salvation Army’s Warren Palmer saying low income earners cannot afford to buy.
“I don’t think it’s helpful for anyone in particular trying to get into the markets when the median price of purchasing a house is up to the levels it is at the moment,” he said.
“Whilst there is some possible value for those people that are already in the property market, for those trying to enter, it makes it very hard indeed.”
Rental costs drop as vacancies increase
Low income earners are, however, finding rental costs have dropped.
Mr Airey says in January, there were around 2,000 vacant rentals but now there are over 4,000.
AUDIO: Caitlyn Gribbin reports on Perth’s housing market. (The World Today)
“The vacancy rate has really increased and rents have dropped a modest 2 per cent in three months but if we extrapolate that across the year, that’s 8 per cent in the year, I think that will continue,” he said.
“I think agents are reporting big numbers of vacancies.
“One in four vacancies is a break lease which indicates the tenants either can’t afford the rent, have found something cheaper, have bought a property or maybe had a relationship change which has caused the break lease.
“I’ve got to say I’ve never seen such a high number of people actually breaking their fixed term leases.”
Anglicare Australia says despite the downward movement in rental prices, there is still a crisis in affordable housing in WA.
In a statement, its chief executive Ian Carter says buying or renting a house in Perth is still out of reach for low income earners.
The Salvation Army’s Warren Palmer agrees.
“We certainly see that the rental prices are still over-bloated and we would like to see them go down further,” he said.
“I guess the sense that for those people that are locked into annual reviews or specific time reviews for their rents, they may not see an immediate impact of this but certainly those entering into the rental market, we’re certainly pleased for the outcome.”