There is some hope on the horizon for Perth property owners as plummeting home prices slow, with early signs the market is stabilising and may even see modest growth in 2018.
The latest report from property analysis group CoreLogic found property prices fell 2.3 per cent in 2017, the smallest year-on-year drop since May 2015.
In the December quarter, Perth dwelling values rose 0.1 per cent.
“Overall, after seven or eight pretty poor years for the housing market in Perth, things are slowly starting to get a bit better,” senior analyst Cameron Kusher said.
“We’ve started to see sales volumes pick up in Perth, which means there’s more buyers coming into the market.
“We’ve seen a lot of people leave Western Australia but the rate of interstate migration away from WA is now starting to slow. Obviously values have come off about 11 per cent from their peak (since 2014).
“There’s a level of confidence returning to the Perth market. Obviously resources are important for Western Australia and we have seen a bit of a rally in resources prices in the last year as well.”
Perth property values fell on average 3.5 per cent in 2016, and 4 per cent in 2015.
Mr Kusher said things may be looking up in 2018.
“Our view is that what we’re going to see throughout 2018 is slowly an improvement in the Perth housing market,” he said.
“By this time next year, I wouldn’t be surprised if we’ve seen some modest growth in the Perth housing market throughout 2018.”
Rental returns grew 3.8 per cent on houses in 2017 and returns on units grew 4.3 per cent.
Sydney leads national property downturn
Nationally, the property market was starting to weaken as a retreat from record property prices in Sydney started to impact the overall housing sector.
CoreLogic head of research Tim Lawless said things had turned sour for the one-time darling of Australian property.
“Sydney’s housing market has become the most significant drag on the headline growth figures,” he said.
Sydney’s house prices dropped 0.9 per cent for the month and 2.1 per cent for the December quarter, leaving an annual growth rate of 3.1 per cent — a stark difference to the 17.1 per cent annual growth rate recorded just seven months ago.
Darwin’s property market was the worst of the capital cities, dropping 6.5 per cent for the year in a housing downturn Mr Lawless said was becoming entrenched.
Since the 2014 peak, Darwin’s house values had fallen by a cumulative 21.5 per cent.
Perth dodges apartment glut
The report also found unit values in Perth fell 0.9 per cent annually, but stabilised in the last quarter, growing 0.4 per cent.
Mr Kusher said Perth’s supply of units was in contrast to the detached housing market.
“What we’ve seen over the last few years in Perth is a huge amount of new housing construction, but we haven’t seen Perth swinging the way of a huge amount of new unit construction, like what we’ve seen in some of the other capital cities around the country,” he said.
Regional markets may also have a glimmer of hope, with some increased sales activity in areas hard hit by the slowdown in the mining industry, such as the Pilbara.
“Sales volumes are slowly starting to come back up off a relatively slow base,” Mr Kusher said.
He said strength was also returning to parts of the South West, with demand for lifestyle properties in that area.