In the two months October and November domestic property prices for Perth fell a further 1.2 percent. The median house price is now well under the $515,000 mark where it hovered at the start of the year. The average price is currently sitting at around $478,200 (and was reported to be as low as $443,000 in one item I read).
According to the item in the Financial Review one of the contributing problems is the ‘glut’ of houses currently on the market. While there has been a glut of houses on the market for some time it has become a little (lot) worse over the last few months. The reason(s) for this are not obvious, especially considering prices are down and it is not generally a good plan to sell in a falling market—unless you really have to.
On the upside Perth’s prices are better than the national average of $448,500.
The cheapest place to buy a house on the mainland is Adelaide where the average property price has fallen almost 30 percent over the last two and a half years. The average house price for Adelaide sits at $370,000.
The next cheapest on the mainland is Melbourne where the average price is just over $400,000 and, failing something totally unexpected happening, is likely to fall under the $400,000 mark in December or January.
The view is that we need a full percentage point drop in the interest rate early in 2012 to pick the housing market up and get people buying houses again. However, personally, I think that the chances of a full percentage point drop by the Reserve Bank early in 2012, or even in the first half of 2012, is very unlikely. This is because the Reserve Bank has made it crystal clear that, unless forced to by other economic pressures, they do not want to do anything that will heat the housing market up ‘in the short term’.
The key thing here is just how long is ‘in the short term’.
I think that this means for at least another year or so. But then there is always the chance that other economic pressures could force their hand.