Friday, July 22, 2011

Perth Prices Continue 15 Month Slide

Much hangwringing going on. The market top for Perth was March 2010. Inventory is slowly shrinking, days on market is slowly climbing (although still well inside buyers' market timing at 82 days, probably why the prices are holding up as well as they are). The forums are full of investor-owners pulling houses off the market because they aren't getting the price they want, ever hopeful the vastly overpriced market will firm up if they wait a bit. Every ounce of momentum, aside from the fickle flights to safety going on in the global markets (keeping bond rates down), is against a recovery. Every one of them. Good luck with holding out. Your neighbor who has to sell should send you a thank you card. Flowers too. And a bottle of wine, even.

Record 15-month decline in Perth house values
According to preliminary data from the Real Estate Institute of WA, the Perth housing market dropped 2 per cent in the June quarter.
Once final sales data is collected, REIWA expects Perth’s median house price to settle at $475,000, a level not seen since December 2007.
REIWA has previously called on banks to drop their interest rates, which could be enough to jumpstart WA’s stagnant property market.
Interest rates won't change the total available credit if foreign appetites for Australian debt don't cooperate.

I really like the headline below. Because, of course, the logical response of a prospective buyer right now is: why not just wait until I get an even better deal? Gotta nip that kind of dangerous thinking in the bud.
Perth house prices unlikely to fall lower Their logic is based on the notion of trade-ups being easier.
Alan Bourke from the Real Estate Institute of WA says activity at the bottom of the market should keep prices stable in the short term.

"There's quite often a knock on effect as people in that market then trade up," he said.

Back to the first article:
Mr Bourke said that according to the initial data, there was increased sales activity in the $350,000 to $500,000 range, with activity in other price segments falling.
So, the median may indeed remain stable, but that's only because hopeful sellers of >500k properties capitulate and price them <500k to move them. The mix at the "affordable" range will begin to include sweeter properties, but the median may indeed remain the same.

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