The median house price in Perth has dropped $20,000 in the June quarter suggesting there is a clear “market correction underway”, according to the latest data from the Real Estate Institute of Western Australia (REIWA).
The metropolitan median house price dropped to $530,000 from $550,000, while units, apartments, villas and townhouses saw the median price slump to $420,000 from $440,000 .
“Some of this fall can be attributed to the composition of sales, with a greater turnover of more affordable properties pulling the median downwards, but it’s also clear there is a market correction underway and many sellers are having to discount to find a buyer,” said REIWA President David Airey.
First home buyers across the state were also revealed to be paying a median purchase price of $430,000 — down from $450,000 on the June quarter last year.
First home buyers dropped by 1000 or 21% and the government has been blamed for the fall.
“We need to be encouraging them to buy and they need an incentive to buy,” Airey told the ABC.
“We warned the state government that when they cut off the final $3,000 of the established home grant for first home buyers … we said this will really slow the market down and it will actually affect ongoing established home sales.”
Over the past year, prices have been under pressure in Perth especially within the real estate business but Airey says he didn’t expect the drop to be “this significant”.
“That clearly shows that, with the big drop in the number of sales, there’s got to be some consumer sentiment around that and I suspect in Western Australia it’s very much to do with our poor, slow economy in the local market,” he told the ABC.
Earlier this year, state economic rankings found that the fading mining boom and lack of investment had dragged Western Australia down from second to third place, slipping behind New South Wales and the Northern Territory.
In particular, the state had dropped to third place on both housing finance and dwelling fronts with unemployment sitting at seventh.
CommSec’s quarterly State of the States report suggested that the end of the mining construction boom could “lead to more balanced growth in Western Australia”.
Over the last six months, the stocks of listings has risen significant with 13,739 properties on the market during the quarter.
Airey says that the increased number of listings coupled with a slowing rate of population growth has led to growing competition among sellers and an average of 71 days to sell a property – compared to 58 days 12 to 18 months ago.
“Across the metropolitan area, almost 60% of sellers reduced their asking price to seal the deal, and where that happened a discount of around 6% was the average reduction,” Airey said.
He also confirmed that the soft market he forewarned for 2015 “had arrived”.
“Sellers and landlords must listen to their agents about getting the price right for a quick sale or to find a long term tenant,” he said.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.