Perth house prices continue to drop

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Perth
A man walks past a vacant block next to apartment buildings in the Western Australian capital city of Perth. Reuters/David Gray

House prices in Perth are still not doing well compared to those in Melbourne and Sydney. The housing market in the city reportedly had taken another blow with new figures that reflect a fall in housing values.

Corelogic, top provider of consumer, financial and property information, analytics and services to business and government, said the house values in Perth dropped by 2.4 percent this month. The latest data indicates that over the past year, house values across the city have fallen by 4.4 percent.

Since January 2009, the city has been performing poorly, with values up by 8.1 percent. Perth was said to be the worst performed property market in Australia. It is the same situation that units sector are reportedly facing, with values down to 2.8 percent this month.

Last year, LF Economics, a research firm founded by Lindsay David and Philip Soo, released a report that claims that housing markets in Perth have entered the early stages of a long-term downturn. Titled "Perth Smashed Avocado Toast Report: An Illustrated Guide to the Latest Trends in the Perth Housing Market," the report suggests that the fall is most likely caused by the mining investment downturn, population growth and the overall weakening state economy.

House prices in Perth are in contrast with the nation's east coast. Sydney’s house values, for instance, climbed to 2.7 percent this month. It’s a 19.1 percent improvement compared to the past year.

Even Melbourne is doing well with values up by 1.5 percent last month to be 14.2 percent up since February of this year. Tim Lawless, CoreLogic head of research, declared that annual growth for capital cities was now at a “cyclical high.” “The annual growth rate across the combined capitals hasn’t been this strong since the 12 months ending June 2010,” he told Perth Now.

The growth in dwelling values in Perth every year has been only 0.3 percent in the past 10 years. In Sydney, it has been 7.5 percent while it has been marginally higher in Melbourne.

According to Lawless, the data can be an indication that Sydney was being priced out of the reach of several potential buyers. “The strong growth conditions across Sydney have provided a substantial wealth boost for home owners, however, the flipside is that housing costs are becoming increasingly out of reach,” he said.

Lawless explained that this is particularly the case for price-sensitive segments of the market. These include first-time buyers and low-income families.

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