Perth’s blistering house price gains end summer with a whimper

Melbourne and Hobart are outpacing Perth in property value growth with house price gains slowing sharply to just 0.1 per cent over the quarter in the west according to the latest CoreLogic Home Value Index.

CoreLogic’s latest Home Value Index released on Monday showed the median house price is now $840,400 while units outperformed houses lifting 2 per cent over the quarter to hit a new median high of $592,417.

The best performing area was Swan, which recorded 20 per cent growth in dwellings (houses and units) over the year to hit a median of $759,869. It was followed by Kwinana (up 18.6 per cent to $649,613), Mundaring (up 18.4 per cent to $807,832) and Bayswater-Bassendean (up 17.4 per cent to $855,771).

CoreLogic executive research director Tim Lawless said its national Home Value Index posted a 0.3 per cent rise in February, breaking the short and shallow downturn that lasted just three months.

He said the mid-sized capitals of Brisbane, Perth and Adelaide had lost their mantle as the strongest growth markets.

“With a monthly change of 0.2 per cent to 0.3 per cent, the mid-sized capitals were outpaced by Melbourne and Hobart,” he said.

“Adelaide and Brisbane are still leading rolling quarterly growth trends, up 1.2 per cent and 0.9 per cent respectively, but Perth’s value growth has slowed more sharply with downward revisions over recent months dragging the quarterly change to just 0.3 per cent.”

Buyers looking to Perth to purchase a home are still facing a dearth of stock available for sale with listings down 28 per cent relative to the previous five-year averages.

Lawless said low levels of newly built housing should lead to rising housing values in 2025.

“Residential construction activity has seen a subtle rise across the detached housing sector, but multi-unit dwelling commencements remain well below average, with little evidence of a pickup in activity due to feasibility challenges amid high construction costs and tight labour markets,” he said.

Strategic Property Group managing director Trent Fleskens said Perth experienced a level of “market fatigue” in the November to January period.

“Transactions were tempered post-Christmas, but so was the arrival of new stock to market,” he said.

“It’s as if half the selling agents in Perth really only started getting back to work around Australia Day.

“Moving into February, we’ve seen a material pickup in transactions back to the numbers we were seeing for the past four years, which demonstrates demand is back at peak levels again.”

Fleskens said coupled with February’s rate cut and expectations for further cuts, momentum was looking strong on the ground for a continuation of the growth cycle as affordability nominally increases.

“The upcoming election period will bring about a lot of noise and fearmongering. This has always been a great time to buy whilst many are distracted or nervous for the future,” he said.

Lawless said the rate-cutting cycle was very fresh and likely to be drawn out however lower mortgage rates were clearly a net positive for housing markets despite the fact they were likely to remain in restrictive territory for some time yet.

“Financial markets are expecting the cash rate to be around 3.55 per cent by the end of the year, implying that only two more 25 basis point cuts are priced in,” he said.

“Until home loan serviceability improves more substantially, it’s hard to see housing markets moving into a material growth trend.”

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