For the first time in 27 years, Western Australia has experienced four consecutive quarters of falling house prices, according to a release this week by the Real Estate Institute of Western Australia (REIWA).
Most buying activity in WA has also stalled as investors have steadily left the state, but first homebuyers are still buying homes at a steady rate. They account for about 40% of all current purchases, according to the REIWA, twice the ratio normally experienced.
REIWA president Rob Druitt said house sales were down 27% from the previous year at the December quarter. Influencing that is no doubt a greater number of properties for sale flooding the market, being 19% more available than a year earlier.
"Much of this stock is from investors seeking to exit the market, which is good news for first homebuyers looking for entry-level opportunities," said Druitt.
Some of the greatest falls in house prices occurred in Perth, with median house values down 5.2% in the December quarter, according to the REIWA. Perth prices fell 12% for the entire year.
Regional areas of the state, however, fared better with houses down just 3% for the December quarter and 6% for the year.
Units also fell in both areas, but more so in regional areas for 2008, according to the REIWA. Perth units declined 10% in 2008, compared to 11% in country areas.
Investors will see rising yields from the trend, however, as rents continue to rise, even with the vacancy rate of 2.4% a full percentage point higher than a year ago.
"It's interesting that rents are increasing while the vacancy rate is reasonable, perhaps indicating that demand for quality rentals remains strong, particularly based on location," said Druitt.
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