National headlines have taken a nervous turn this month. The country’s largest home builder has warned that a softening market is stalling new construction, and fresh lending data shows buyers pulling back for a second quarter in a row. If you own a home in Perth, or you are thinking about buying or selling, it is fair to ask what all of this means for you.
The short answer is that Perth’s story is very different from the national one. Here is what is actually happening.
The national picture: confidence has cooled
Metricon, the biggest home builder in the country, reported that sales dropped sharply in some markets last month, and its chief executive put it down to a slump in buyer confidence. The logic is simple. People are far less likely to commit to building a brand new home when they are unsure where established prices are heading.
The lending figures tell a similar story. According to the Australian Bureau of Statistics, new loan commitments fell across the board in the June quarter. Investor lending saw the biggest drop, down more than 8 per cent, its steepest fall in around three and a half years. Loans to owner occupiers and first home buyers also eased back.
Two things are driving this. Interest rates have climbed, which trims how much people can borrow, and there is ongoing uncertainty around federal changes to negative gearing and capital gains tax. Faced with that mix, a lot of buyers are simply sitting on the fence and waiting for clarity.
The catch for the construction industry is obvious. When buyers wait, fewer new homes get built. Even here in WA, Perth apartment developer Finbar noted softer interest in its mid priced units as buyers held off.
Perth is easing too, but from a position of real strength
It would be wrong to say Perth is immune. National values slipped in July, and Perth’s own momentum has clearly slowed, with the market roughly flat for the month and a small dip over the quarter, according to Cotality.
But context matters enormously here. Perth values are still up around 20 per cent over the past year, the strongest annual result of any capital city, with the median dwelling value now sitting just above one million dollars and only a fraction below its recent peak. After five years of exceptional growth, most Perth owners are holding substantial equity, and analysts point out that Perth has one of the largest price buffers of any capital. Even a significant pullback would only unwind a portion of recent gains.
Rents also remain very tight, with annual growth still running near 8 per cent, which continues to support investor interest even as new lending softens.
So the national mood is cautious, but Perth is easing gently from a genuinely strong base rather than falling off a cliff.
What this means if you are thinking of selling
The good news is that most Perth sellers are in a strong equity position, and well presented homes in sought after suburbs are still finding buyers.
The important shift is pricing. Listings are rising, which gives buyers more choice and a little more room to negotiate. That means homes priced to yesterday’s peak are the ones that tend to sit, while realistically priced homes still move well. Holding out for a higher peak is a gamble when momentum is clearly easing, so pricing to today’s conditions is the smarter play.
What this means if you are thinking of buying
Buyers now have more choice and more negotiating power than they did a year ago, which is a welcome change. The trade off is that borrowing capacity has tightened after recent rate rises, so knowing your numbers before you start looking matters more than ever. A current pre approval gives you a clear budget and real confidence when you find the right home.
My take
It is easy to read a national headline about a property slump and assume the worst. But Perth continues to sit in a stronger position than almost anywhere else in the country. The market is not booming the way it was, and that is actually healthy. For sellers it means pricing sensibly and presenting well. For buyers it means acting with a clear budget rather than waiting endlessly for a bottom that Perth may never really see.
If you want to know exactly where your own home sits in today’s market, that is where I can help.
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Suresh Sama
0452 512 396
Real Estate Consultant,
First National RS Group