With the general economic downturn in Western Australia due to the cooling off of the mining industry, it was only a matter of time before the cost of land started to come down. Established house prices have been falling steadily over the last four to five years. Depending which month you read the Financial Review or The Australian, then established home prices in Perth have fallen between 9 to 15 percent in the last five years with 4.1 percent of that fall happening in the first quarter of this year.
In the last two years the average cost of vacant serviced land for sale has fallen by 11.5 percent. This is an average, so blocks in some locations—a very small handful of locations—have held their price and may have even edged up a tiny bit; but the majority of land developments have suffered falls of some degree over the last two years contributing to the average downturn of 11.5 percent.
This is sort of good news for new home buyers, although even with this drop the average block still costs $230,000 and blocks in more desirable areas are still over that $300,000 hurdle mark.
As things stand, the experts are forecasting that block prices will continue to 'correct' (code for: reduce in cost) over at least the next 18 months. If they have this forecast close to correct, and it is my opinion that economic forecasting over 12 months is even less reliable that weather forecasting over one month, we should see block prices hit their bottom late in 2018.