CoreLogic June Monthly Home Value Index which shows Perth prices decreasing by nearly 1.1%
After a brief plateau last week sales have accelerated their upward trend while listings continue to fall. Sales increased by 35% to 1318 with houses increasing by 18%, units by 59% and vacant land by 53%. The increase in unit sales was the biggest surprise based on the recent relatively small growth compared to houses and vacant land. The graph below shows just how steep the growth in sales has been but this level would appear unsustainable as listing numbers continue to decline.
Listings decreased by 5% to 10,407 with houses decreasing by 5%, units by 3% and vacant land by 9%. We have adjusted our listings graph below to include only the current calendar year so we can really focus on the recent decline.
These trends should not be ignored because they show a serious shift in supply and demand in the real estate market. REIWA President Damian Collins said this week “There is a real possibility that we will run out of titled and completed blocks in the coming months.” This type of activity should theoretically support or increase property prices but Corelogic’s June Monthly Home Value Index showed Perth’s prices decreasing by nearly 1.1%. Given the change in demand and supply it is curious to see a decrease in property prices especially considering sales aren’t generally due to mortgage default because of the Bank’s mortgage holiday.
The table below shows Corelogics latest results for all cities.
Now this is a long way off the 20% drop in property prices that was earlier forecast by some economists and now the looming September fiscal cliff when Jobkeeper comes to an end and banks cease the mortgage holiday seems less likely or obvious. The banks have already agreed to extend the mortgage holiday for those facing hardship due to the virus and the pressure is building on the Federal Government to extend Jobkeeper, especially with Victoria going back into lockdown.
Rental listings maintained their downward trend with listings decreasing by 1% to 3963 as owner-occupiers continue to replace investors in the market. Rental listings are now 47% less than this time last year, which is really quite staggering. This decline in rental listings is the main reason Perth joined Adelaide as the only two capital cities that did not see a fall in unit rent prices for the June Quarter according to Domain’s Rent Report. There were “record falls” across the rest of Australia as unit rent price fell by 3.8% in Sydney, 3.5% in Melbourne, 8.4% in Hobart, 2.1% in Canberra and 1.3% in Brisbane due to rapidly rising vacancy rates in these cities.
Recently the ABS released the December Quarter 2019 population statistics and although there is a 6-month lag to get the results we usually follow them closely because the population trends are easy to see over a one or two year period. Of particular interest is net interstate migration because over the last 10 years it has been the major factor for the rise and fall of Perth property prices.
Reproduced with permission from:
in house economist from Michael Keil @ michaelkeil.com