The West Australian today has reported that the current price slump in WA is set to end…
Two years of house price pain for Perth homeowners is likely to end, with forecasts property values are going to grow across the State.
Moody’s Analytics, in a report into the national property market, believes the decline in house values that has left many Perth homeowners worse off is about to finish.
It says Perth house values will lift 4.1 per cent through next year. It would be the first annual increase in three years.
Analysts Alaistair Chan and Faraz Syed said there were clear signs of a recovery taking shape in the Perth property market, with values up modestly in the past two months.
Unemployment had likely peaked, the sharp fall in wages was coming to an end and population growth was probably ahead of the construction of new homes.
“The slump is ending through a combination of a stabilisation in the labour market and reduced future supply,” the analysts said.
“Incomes are still falling — with another 4 per cent decline in the first quarter — but the worst has passed and we forecast a small improvement in the third quarter.”
A turnaround in Perth property prices would be good news to hard-pressed owners who have seen the value of their assets ebb.
It could deliver a needed boost to the Budget as stamp duties improve while retailers, facing the toughest market in the country, could also expect a lift.
House values outside of Perth have taken even bigger hits in the past two years, particularly in areas directly exposed to the mining construction boom such as Port Hedland and Karratha.
Values in regional WA have fallen 6.2 per cent in the past three months.
Moody’s believes the recovery will take longer to play out in these areas but it still expects a 0.5 per cent increase in values next year. The Commonwealth Bank warned yesterday that the Perth market faced tough months because of the big increase in building in recent years.
It said a further cut in interest rates could boost the market.
Moody’s does caution that there are risks.
It estimates that if China’s economy endured a “hard-landing” — which no one is predicting — it could see house values in Perth tumble a recession-inducing 22 per cent.
This article was first published here on 10th June 2016, written by Shane Wright.
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