The latest quarterly home value index from Cotality shows Perth’s median dwelling price dropped 4.7 per cent over the past three months, from a peak of $1.08 million in January. The median has now fallen to $975,000, a notable milestone after months above the million-dollar threshold.
However, Trent Fleskens, director of Strategic Property Group, cautioned against reading too much into the median figure. “It doesn’t really matter if it’s $999,000 or $1 million or $503,000 or $507,000,” he said. “A million is a number that is just an arbitrary number that reflects the median house price of a select group of suburbs in WA. It doesn’t specifically reflect the performance of your house on your street in your suburb.”
Fleskens pointed out that even when the metro-wide median rises or falls, individual suburbs can move in opposite directions. He argued that buyers should focus on their own monthly mortgage costs rather than the headline price. “The house price could have gone down, but if the rate went up and the price of their debt is still the same on the 28th of every month, then what was the benefit of that?”
Cotality research director Tim Lawless acknowledged the sharp downturn, noting that Perth has experienced eight downturns in the past 40 years, “and this is the most rapid that we’ve seen”. He added that it follows a period of extraordinary growth: over the past 12 months values are still up 10.1 per cent, and over five years the market has risen 74 per cent. “The silver lining of this downturn is that prices are coming down, making housing more affordable,” Lawless said.
Yet affordability gains are being eroded. On Tuesday, the Reserve Bank of Australia lifted the cash rate to 4.6 per cent, a 15-year high. Fleskens said that until inflation is controlled and interest rates fall, buyers will remain cautious. “Not only are they obviously worried about the nominal cost of a home … what they’re actually worried about is what affects them on a weekly basis, which is their monthly mortgage repayments.”
Some outer metropolitan areas bucked the trend. Serpentine-Jarrahdale, Mandurah and Rockingham recorded the highest percentage price increases across Perth this year, suggesting demand is shifting to more affordable fringe suburbs.