I was just watching the finance report on ABC24 sitting here in my motel room and they gave a five minute overview of Australia’s property market for 2011 with some quick drill down state-by-state.
The bad news is that the Perth property market fell by an average of 4.3 percent in 2011. This is worse news when you factor in that the value of properties in Perth have fallen now for four years in row, and even though the yearly falls are relatively small ranging from 3.1 percent (in 2008) to 5.8 percent (in 2010), the compounded effect of these four year’s of falls works out to just over 18 percent.
This means that a Perth property worth $600,000 in 2007 that has fallen by the average amount over the last four years it is now worth about $492,000.
The good news is that, for the first time in four years, seven Perth suburbs actually recorded an upturn although the highest upturn was only 0.7 percent. They didn’t say which seven suburbs these were but I kind of hope that Kalamunda was one of them; however knowing my luck it most likely wasn’t.
Another bit of good news is that Perth did better than most of the popular ‘holiday’ homes localities south of Perth. Mandurah fell by 5.8 percent in 2011 and Bunbury and surrounds fell by 5.7 percent. Denmark fell by 7.0 percent. Sounds a bit to me like it could be a good time to buy a property ‘down South’ somewhere—although this may not be the bottom. Prices may fall further.
Back on the bad news side is that, despite these falls, the average cost of a house in Perth is still sitting at what are considered ‘toxic’ levels. The average cost of a house is still sitting around 5.5 times the average income whereas the safe maximum level is considered by economists to be 3.5 time the average salary.
As a comparison in America the cost of the average house is only 2.5 times the average salary—which is way below the 5.5 times of Australia.
According to the four economic experts interviewed very quickly at the end of the ABC24 item three of them are expecting property prices to fall by about a further 3 to 5 percent in 2012 and one predicted that prices would remain flat over 2012. None of them thought home prices were likely to improve in 2012.
There is bound to be a 2011 property review round up in the Australian Financial Review soon. It will be interesting to see what they come up with.
Only time will tell.
Updated … 6:32 p.m. >>>
Now I have just come across an item on PerthNow quoting RP-Data (here) and they are saying that Perth house prices fell by 5.2 percent in 2011 (compared to 4.3 in the ABC24 article quoted above), and unit prices fell by 3.3 percent. Interestingly the average of these two is 4.25 percent which comes in really close to the 4.3 percent in the ABC24 article so maybe this was how the ABC24 percentage was arrived at … but I just made that up.
The PerthNow posting, again based on RP-Data numbers, says the average house price in Perth is now down to $465,000.