Perth housing fall: hits keep coming for the mortgage default capital

Perth homeowners are ‘taking very big hits’ in a falling local real estate market.

Hoping to break even: Tina Paramor is preparing to sell her investment property at Beckenham in southeast Perth. Picture: Colin Murty

Perth homeowners are “taking very big hits” in a falling local real estate market that the West Australian Chamber of Commerce warns may get even worse under a national housing affordability package favoured by the Turnbull government.

Perth is the only capital where houses are worth less than they were a year ago, according to data released by CoreLogic yesterday. The value of homes in Perth even fell 0.8 per cent during the past week. Overall, the value of Perth homes has fallen 5.5 per cent in the past 12 months while homes have risen 18.1 per cent in Sydney, 16.7 per cent in Melbourne, 4.8 per cent in Brisbane and 3.1 per cent in Adelaide.

WA Chamber of Commerce’s chief economist Rick Newnham acknowledged all markets could benefit from some policies of the “cradle-to-grave” housing affordability package if they were “right sized”. The package is likely to include a mutual-obligation superannuation plan for first-home buyers, tax breaks for downsizing the family home in retirement and a social housing plan to ­alleviate rental stress.

“First-home owners and empty-nesters often face difficulties either purchasing or selling properties,” Mr Newnham said. “However, increasing supply across the board could negatively impact Western Australia, which is at the opposite end of the ­housing cycle, compared to ­Sydney and Melbourne.”

Yesterday, as data showed the auction clearance rate in Perth was just over 22 per cent compared with more than 80 per cent in ­Sydney and Brisbane, Perth real estate agent Willie Porteous said WA was in a uniquely dire situation. The iron ore-rich state now has the title of mortgage default capital of ­Australia. “People can still sell, but they are taking some very big hits,” he said.

The real estate collapse in Perth has reached all price brackets. Mr Porteous said that four years ago he took offers of $9.25 million then $9.5m to the owners of a home in Perth’s dress circle western suburbs but they turned the offers down because they were holding out for $10.75m. Last week, they sold for $6.5m.

“We had a patch like this in 1983, then again in 88, 89 and 90 but never as bad as this,” he said.

In the southeastern Perth ­suburb of Beckenham, where modest property prices climbed during the construction phase of the resource sector boom, Tina Paramor is preparing to sell in a market that has plunged 20 per cent in the past two years.

The 35-year-old’s first foray into the investment property market was a neat three-­bedroom, one-bathroom townhouse close to shops and public transport.

The saleswoman for a Perth industrial equipment supplier paid $320,000 for the property ­almost two years ago then invested in a kitchen renovation, but her real estate agent, Charlie ­Bellow, predicts Ms Paramor could lose more than $50,000 counting stamp duty.

“I am hoping I can break even,” she said. “It won’t put me off ­investing, though this hasn’t been the greatest experience.”

Mr Bellow says three years ago in the same area, the median house price was $450,000 and he was clearing about 70 per cent of houses at auction. “Some of the properties I was selling were going for over $120,000 above the reserve,” he said.

Now, he said, it was “quite regular” to encounter sellers who would be making a loss. This was particularly likely if they bought in the past five years.

After considering what is known of the federal government’s housing proposal, Nathan King of valuation firm LMW declared it “more relevant to remedying the affordability challenges being experienced on the east coast”.