Perth property resale losses hit record numbers as housing market remains weak

Panorama of suburban Perth, taken in Morley
Written by The ReReport
As seen in the Source link, written by on 2019-07-08 19:16:42


July 08, 2019 19:16:42

New figures have revealed there were a record proportion of houses and units resold at a loss in Perth in the first three months of the year.

Key points:

  • Perth property sale losses totalled $145.4 million, the highest of any capital city
  • The worst performing areas were Stirling, Mandurah and Wanneroo
  • Analysts believe interest rate cuts could provide some relief

Data from CoreLogic shows almost one-third of residential properties sold in Perth between New Year’s Day and the end of March went for less than the vendors had paid.

Almost 29 per cent of houses sold at a loss, second only to Darwin among the capital cities, while nearly half of all Perth units (49.2 percent) sold at a loss.

In dollar terms, Perth property sales made up almost a quarter of national losses (24.8 percent, or $145.4 million), the largest share of any capital city.

CoreLogic head of research Cameron Kusher said the data showed conditions in the Perth housing market remained weak.

“You’re looking at values in Perth that are back to levels last seen in 2007,” he said.

“So when you think about that, anyone [who has] bought since 2007 has virtually seen no growth or seen values slightly go backwards over that period of time.”

The worst-performing areas were Stirling (-$18.9 million), Mandurah (-$11.9 million) and Wanneroo (-$11 million).

But Mr Kusher cautioned that the data should not be seen as a marker of financial distress.

“Just because an owner-occupier makes a loss, doesn’t necessarily mean they’re in financial hardship,” he said.

“For example, you could sell your property at a loss, but the property you’re buying may well have fallen in value more than yours did. So you might be upgrading into a better property.”

APRA changes, rate cuts to provide buffer: analysts

While the figures paint a bleak picture for those selling property, consecutive interest rate cuts by the Reserve Bank and changes to lending requirements by the banking regulator may provide a buffer against further price falls.

“It’s slightly more positive for borrowers than it has been, but it’s not back to the days before 2014, where it was quite easy to get a mortgage,” Mr Kusher said.

“You do have comprehensive credit reporting coming in as well, so there’s still going to be that level of conservatism about lending. So we certainly don’t think, even in Sydney and Melbourne, that it’s going to be a rapid rebound in the market.”

Real Estate Institute of Western Australia deputy president Lisa Joyce believed the interest rate cuts and looser lending requirements were likely to provide some stimulus for the Perth market.

“It is a little too soon to measure the impact of that,” she said.

“It’d be probably reasonable to say that those people that are in the space looking to buy will be more inclined to act on the back of those sort of incentives.”

“It’s probably unlikely to be the deciding factor for those not already considering entering the market.”

Mr Kusher agreed that it was too early to determine what impact the regulatory changes might have.

“I think you’ll probably see the Perth market bottom late this year or early next year,” he said.

“I think certainly that will bring a few more buyers into the market. You’d have to think that there’s a bit of pent-up demand.

“The point to make is even when the market does start to recover in Perth, it’s a long way back to those previous highs.”