With signs the Perth housing market may slowly be emerging from a long hibernation, a Curtin University economics professor says we never had a bust.
“Perth prices have risen quite dramatically compared to the rest of Australia so WA would probably be the leading state in terms of the rate of growth of housing prices from the mid 2000s until now,” Graduate School of Business professor Peter Kenyon told Curtin News.
“But the main rise happened around the time of the last boom.
“In 2007/08/09 housing prices really increased very dramatically in Perth to a quite ridiculous level where someone would put a house on the market one day and hours later people would be bidding for it.”
Professor Kenyon said Perth housing prices raced well ahead of the normal trend, as illustrated in the following Reserve Bank of Australia graph.
“When the Global Financial Crisis happened it hardly affected Western Australia but did dent the confidence in all sorts of asset accumulation including investing in housing,” he said.
“As a result of that the market dropped.”
Professor Kenyon said that any fall in housing values would inevitably be seen by investors and homeowners a “terrible situation”.
“But if you look at the data, Perth prices now – even despite the considerable fall – are back approximately to what trend growth would have been had we only experienced trend growth,” he said.
“So, I don’t perceive this as a dramatic fall in house prices.
“I think it’s just a revert to normal.”
The number of property documents lodged with the state government has risen in recent times, a Housing Industry Association survey shows a 4.9 per cent rise in new houses sold across the state in October, and ABS figures show WA was the only state to record an increase in home building approvals over the same month.
“Things like building approvals have turned around and whenever that happens it indicates that probably the housing market is beginning to come out of the gloom,” Professor Kenyon said.
“Where [an upturn] isn’t showing up is in the top end of the market, and by the top end I mean anything above median price.
“But at the very top end – once you get to the 900,000 to million dollar mark – needless to say movement is going to be very slow.”
Professor Kenyon encouraged owners and investors to stay as calm as the doldrums they have ridden out over the past couple of years.
“If you’re holding property and you’re only seeing prices go down, I wouldn’t worry because property investment is long term and should be seen as such,” he said.
“The news isn’t that good, but it’s not all bad either.
“Stay patient is what I’d say.”
PHOTOGRAPHY: SAM PROCTOR