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Western Australia powers on as east falters

Figures from the December Quarter released last week by the Real Estate Institute of Western Australia (REIWA) show a local market that continues to boom, defying the downturn on the east coast.

REIWA President Greg Rossen said that a combination of steady, low interest rates and Western Australia's (WA) vibrant resources sector was largely behind the growth in demand and prices.

Perth powers forward

The price for a home in metropolitan Perth has risen by almost 5 per cent in the quarter ending 31st December, taking the new median to $325,000, Mr Rossen said.  Perth is now ranked fourth in Australia for median house prices among the nation's capital cities, coming in behind Sydney, Melbourne and Canberra respectively.

Mr Rossen said that house prices have increased by 18 per cent over the last year and rents have jumped by 25 per cent over the same period, including a 6 per cent jump in the last quarter alone.  REIWA said that the current strong and steady run in the market is being fuelled by a strong demand for owner occupation and rental accommodation but also bottlenecks in the supply of new homes.

REIWA report that the residential construction industry is at capacity but, struggling with skills shortages and approval delays, cannot keep up with demand.  The number of dwellings available for sale in Perth was recently 8,080, down from 9,163 in the September quarter, a drop of 12 per cent for the last three months of last year.

• Mr Rossen said the vacancy rate for rental accommodation remained around 1.6 per cent for the second quarter in a row with the median rent in Perth rising by around $44 per week since December 2004.
• The median price for a unit or apartment in Perth is now $258,000, up 4 per cent in the quarter and up by $38,000 from a year ago.
• The number of selling days has dropped from 45 in the September quarter to just 37 in the December quarter. Overall, this is down 20 per cent over the year and illustrates that properties are moving very quickly, Mr Rossen said.

Outside the metropolis

In regional areas of WA continued strong growth was also evident, particularly in coastal areas and in the State's Southwest.

Areas such as Mandurah, Bunbury, Busselton, Geraldton and Albany continue to record strong growth, while several outback places such as Norseman, Newman, Port Hedland, Roebourne and Carnarvon have burst onto the scene as hot property with mining companies attracting new workers all needing places to live, Mr Rossen said.

While the median price for houses outside of the metropolitan area was lower at $310,000, these prices are growing at a faster rate than the city and are up almost 22 per cent on last year.

Prices of vacant lots of residential land in regional WA are rising even more strongly, up 23 per cent on last year and now valued at a median of $166,000, Mr Rossen said.

But Sydney slow

A survey released last week by Australian Property Monitors (APM) shows that the median house price in Sydney fell 5.1 per cent to AUD$518,000 during the 12 months to December 31, 2005.  This marks the second consecutive year in which house prices in Sydney have fallen.

These figures come at a time when the Reserve Bank of Australia (RBA) has noted that the narrowing gap in house prices between Sydney and Australia's other capital cities has returned to its pre-boom size of the early to mid 1990s.

However, according to the RBA, overall average nationwide house prices have been relatively stable on most measures since the end of 2003.  What's more, the last quarter of 2005 was more positive as prices rose 0.1 per cent in Sydney and - for the first time since the December quarter 2003 - rose in every city across Australia, according to the APM report.

But APM research director Louis Christopher ended on a cautionary note saying "For Sydney, I suspect we are not quite out of the woods yet."

• Melbourne recorded a two per cent rise over the year ending December 31 2005 seeing its median house price reach $348,500
• Canberra had a 2.3 per cent jump to $409,500
• Across the continent, Darwin had the biggest rise in prices over the year, increasing 20.9 per cent to $344,000
• Perth was second in line, climbing 18.7 per cent to $363,000.