Residential values are trending south across metropolitan Perth, with unit values dropping 1.51% in the three months to September, while house values remained flat, according to Residex.
"House and land sales have decreased to the lowest level in more than a decade, and unfortunately for homeowners and investors in Western Australia's capital, it doesn't appear as though a quick turnaround is on the cards for the short term," says Paul Smith, marketing director at Braxton Chase.
The state government's 15% cut in stamp duty costs failed to provide stimulus to the market, he adds, even when combined with recent interest rate cuts.
"The city may be in for some dramatic adjustments in a relatively short space of time," Smith says. "The best case scenario for the Perth residential market as a whole is that values will remain flat or on par with inflation - the reality, however, is a downward market in the short term."
Despite this negative short-term outlook, Smith believes that none of the fundamentals of the Perth property market "suggest the need for panic selling".
"On the positive side, the state economy continues to move from strength to strength, and much of the budget surplus is being used to fund new infrastructure from roads to hospitals and educational facilities," he says.
"This will, in turn, benefit the residential markets - just don't expect the effects to happen quickly."
Real Estate Institute of Western Australia (REIWA) president Rob Druitt believes the sluggish market will get the boost it needs when the Reserve Bank's recent interest rate cuts begin to flow through to consumers.
The state's housing downturn was partly due to buyer uncertainty around interest rates which is "now likely to change" he says.
"With our state's population growing at around 1,000 people per week, there is a lot of pent up demand in the system from people wanting to buy but waiting for the right signals to move," Druitt says.
"The rate cuts may well mark a significant turning point for many people [who are] currently in that hesitant position."
REIWA data reveals that median prices in Perth have retracted by around 10% since January, he adds. "Now that house prices have corrected after the boom, interest rates have fallen and the number of homes on the market has swelled, it's reasonable to expect that many first time and upgrade buyers will emerge," Druitt adds.
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