House prices across the country have fallen by 1.2 per cent over the March quarter, according to the Domain Group’s State of the Market report.
Darwin led the charge with a 7.5 per cent drop in the quarter, followed by Sydney, where prices fell by 2.6 per cent.
The downwards trajectory of Perth prices continued from its peak in December 2014, when the median price was $616,229. A house in Perth now costs $553,486.
Perth’s market in recent years has started to show signs of recovery but has been prone to seasonal variation.
Local analysts say the state economy’s resurgence is likely to lead to house prices stabilising, but any meaningful growth is some time off.
The strongest-performing market was Hobart, where house prices rose by 2.7 per cent, while both Canberra and Adelaide saw slight growth of 0.8 per cent.
In Darwin, apartment prices also plummeted, with a 15.9 per cent drop over the quarter and 26.9 per cent over the year.
Domain Group data scientist Nicola Powell said Darwin had always been a volatile market, and the results of the latest report showed those conditions continuing.
“It’s impacted seasonally, and we are seeing those seasonal variations,” she said.
“When you look at the actual median price for Darwin, it’s back to around 2008 prices. Darwin is now the most affordable city to purchase a unit in. It hasn’t had that title since mid-2005.”
In March last year the median price for an apartment was $422,875. This year it is $308,999.
Domain’s recent rental report showed that median Darwin house and apartment rents had also fallen over the year, down to $530 per week for a house and $410 a week for a unit.
“You saw strong growth during the mining boom, not so much now,” chief executive of think tank Grattan Institute John Daley said. He said that there was little that governments could do to intervene.
“The kinds of thing that drive regional economic growth and population growth are the kinds of things governments don’t control. They don’t make a mining boom happen, and they can’t turn it off either,” he said.
“The government can make sure there are appropriate hospitals and schools , but it’s got all those things already.”
Quentin Killian, chief executive of the Real Estate Institute of the Northern Territory, said Darwin was seeing more positive news about the economy.
“We’ve had around 21 consecutive quarters of negative interstate migration,” Mr Killian said. “Interestingly we have had an announcement around fracking – it is something we’ve desperately, desperately been waiting on them to say yes to.”
“It’s the stimulus we need for our economy, and with that comes people”, he said.
But on the flip side, he added, rental yields in Darwin were excellent, and investors could look at getting in at the bottom of the market. “There are huge bargains,” he said.
While he didn’t see the market picking up immediately, the size of the Darwin rental market in particular meant the effects of a re-invigorated economy wouldn’t take long to be felt by investors.
“Darwin in particular is a very small market, and it moves very quickly”, he said. “Here, you’re talking a couple of thousand dwellings at most. It can change in 12, 16, 18 months.
Across the country, Melbourne posted 8.8 per cent annual growth, but just 0.1 per cent over the quarter.
Brisbane’s prices were relatively stable, up 1.5 per over the year but down 0.6 per cent over the quarter.
Mr Daley said price growth in Melbourne and Hobart was being driven by “very rapid population growth”.
He said that in Brisbane’s case, the fall in apartment prices wasn’t necessarily the result of too many apartments being built.
“People say its over-supplied, but there’s not a lot of empty apartments in Brisbane”, he explained. “Just people selling them for less than they want to.
“As prices start to fall a bit, people who were shut out of the market previously start to buy in.”
Resource from Domain