Market Report - Western Australia (February 2008)

Ongoing affordability issues leave the Perth market stretched to the limit. Perth experienced the slowest growth of all the state capitals in the 12 months to October, with Residex recording a gain of just 2.39%.
Only Darwin experienced slower growth during the three months to October, with Perth houses showing a small improvement of 2.59%. The tight rental market has brought good news for investors however, with a $75 increase in rent year-on-year.
According to Andrew Donnelly, CEO – Braxton Chase, affordability in Perth has been stretched to the limit, with median house prices nearly tripling in the six years leading up to 2007. 
Though he expects migration and strong resources activity to keep demand firm, he thinks upward movement in housing values will be highly unlikely this year.
“The sky-high gains in Perth property have been a thrilling ride for many, but it’s time to brace for what could be a bumpy ride back down to earth,” says Donnelly. “No one should assume that the soft landing experienced so far will continue. Some hard corrections may very well be in store for the near future.”
However, property owners on and around water are most likely to be insulated from the downturn, he adds.

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