Market Report - WA (August 2008)

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A glut of new residential listings in Perth make it very much a buyers' market, whilst elsewhere in the state, migration continues to fuel regional growth in mining areas.

Statistics for the WA housing market tell a story that has become all too familiar in recent months: prices in Perth stagnate while some regional property markets continue to benefit from the resources boom.

Quarterly growth in Perth's property market slowed by 2.04% to 1.78% according to the latest Residex figures, while the Real Estate Institute of Western Australia (REIWA) figures actually show a quarterly drop of 2.7% in median property prices from $470,000 to $457,000.

REIWA President Rob Druitt points out that a recent rise in affordable property purchases and a drop in top-end property sales may have skewed their results somewhat, but he believes that the bigger picture is painted by a big increase in the sheer number of properties that are hitting the market.    

"Given the flatness in much of the local real estate market following the boom, many investors are withdrawing from Perth property and putting their homes up for sale. This has seen the number of listings grow from around 5,000 to more than 17,000 in just 18 months, flooding the market with choice and giving buyers more competition and more leverage in negotiating on price," says Druitt.

While Perth is undoubtedly a buyers market at the moment, with REIWA showing a quarterly increase in average selling times of six days to 71, Druitt sees strong population growth as the key to stirring up more activity on the residential purchase front. He remains guarded however about the prospects of price growth in the near future.

"As the population continues to swell on the back of a strong economy, many people have been keenly waiting and watching for the right time to buy. Now, with interest rates on hold and possibly coming down shortly, and property prices rationalising to a more afford able level, we are likely to see some renewed buyer activity in the market. However, until we see a return in buyer confidence we are unlikely to see any significant price growth in the Perth market," says Druitt.

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