Why house price growth is slowing after four years of gains
Perth’s skyrocketing property prices are being reined in after almost four years of persistent increases; new data reveals moderate growth in average house prices for the June quarter.
The WA capital has seen 15 consecutive quarters of growth, reaching a median house price of $1.18 million, according to Domain’s latest House Price Report.
But house prices rose by just 1 percent in the quarter; this was the weakest pace in more than a year.
Domain’s research and economics chief, Dr. Nicola Powell said the report signaled a “transformation” in purchasing conditions across Perth.
While the Perth market remains the strongest among Australia’s capital cities, Powell said the report suggested it had exceeded the “peak rate of price growth”.
“We have seen unit prices fall, but I think this signals that the strong price increases of those years are now a thing of the past,” he said.
Median unit prices fell 1.3 per cent in the June quarter, ending a three-year period of growth driven by soaring house prices as first home buyers looked for other footholds to get on the property ladder.
Haiven Property South director Peter Zambotti said the number of people visiting opening homes in Applecross, one of the suburbs where average house prices have fallen, had fallen “drastically” in the last quarter.
“They went from 20 to 5 or 6. That’s a big change in terms of numbers and we don’t get multiple offers anymore. We get single offers and sometimes subject sales, which is a huge change,” Zambotti said. he said.
“Some things are selling in Applecross and they’re actually up, so your quarter acre blocks, but most of the rest is down.
“Apartments have dropped considerably. We are selling fewer apartments than they paid for a year ago.”
With more options available, people are less inclined to make impulse purchases, Zambotti said.
“They’re being more pragmatic. They’re being more decisive about exactly what they want. Previously Applecross was going up so much that people were buying just to be in the market so they wouldn’t miss the run. Now they’re just buying if it’s right because the market isn’t going up,” he said.
Zambotti expects many more listings to emerge on the market.
“So I think there will be a lot of stock in the spring, which will affect supply and demand. We’re on 6,500 listings, our modeling shows we could be on 10,000 listings by Christmas,” he said.
Powell said unit prices fell in all capital cities except Darwin in the June quarter and he believed this could be down to a shift in investor sentiment over Labor’s negative gearing and changes to investment taxes.
He added that supply was increasing in Perth, with listings experiencing the strongest annual increase since 2011.
“When you look at the overall supply in the market, it’s 31 percent higher than it was this time last year,” Powell said.
“New listings have increased, with total supply increasing faster than new listings, indicating that the dynamic is slowing absorption rates.
“Ultimately, I think buyer demand is starting to ease now, and that’s all helping to kind of slow down Perth’s unstoppable housing market.”
Powell said the biggest price declines would be seen in cities such as Sydney and Melbourne, but Perth could see much slower conditions in 2026.
He said a catalyst, such as lowering the interest rate, was needed to change market conditions.
“But that’s not going to happen anytime soon,” he said.
“Perth has seen such a marked change in affordability and price point that I think all of that has come together to really change the outlook and price action,” he said.
