Property market topping out in three to six months, says analyst but don’t expect too much price relief

Perth property is showing classic signs that prices will stagnate within months, according to a leading West Australian analyst, who is the first to call out the top of the market. While other analysts maintain values will continue to rise — with periods of stabilisation — over the rest of the year as the housing shortage remains, valuations expert Gavin Hegney claims a recent bump in listings shows that a significant number of investors are seeking to cash out of the market. Combined with a recent drop in sales, the divergent trends traditionally indicate a slowing market. He said the combination typically results in a general price stagnation three to six months later. While Cotality data shows Perth property prices have risen by 2.1 per cent over the past month, he said sentiment was starting to turn, and he even expects some homes in some areas will drop in value. Mr Hegney said less desirable homes in areas where there had been heavy investment — like Armadale —will likely drop in value. “Some areas where investors outbid owner occupiers are the areas most at risk when investors stop buying,” he said. “It will leave owner occupiers to determine the price.” Owner-occupiers faced much greater affordability concerns and restrictions on borrowing capacity, and will likely bid down prices on some homes. Analysis by The West Australian shows 3966 properties are currently listed for sale - up 20 per cent from 3294 four weeks ago. It is the first time in four years that there are more listings in April than in January. At the same time there has been a five per cent drop in sales, from 774 a month ago to 734 now. However, there are currently both fewer sales and listings than at the same week last year, and the ratio between sales and listings is the same in both years. Not everyone agrees the market is about the stagnate . Property commentator and former president of the Real Estate Institute of WA, Damian Collins said prices would broadly continue to increase. “The level of growth is slowing, but we are still seeing prices rise. We’ve seen an increase in stock for sale, but we are still significantly undersupplied,” he said. “We may see periods where prices stabilise for a few months, but while we have such a shortage of stock, barring any major economic downturn, prices will continue to rise, albeit at more sustainable levels than we’ve seen in the last few years.” Mr Collins said properties within 15km of the CBD are still performing well and drawing solid offers, but competition is lower as distance increases. He said run-down properties or those on main roads were taking longer to sell. “For single houses in good locations, we used to see anywhere from 20-40 people at most home opens 12 months ago. 10-20 is more the norm,” he said. “For desirable properties, we used to have 10-20 offers to compete with 12 months ago, 3-8 offers is more common now. Mr Collins said the urgency in the market had largely subsided. While people were still making quick decisions, it was not driven by fear of missing out, as it was a year ago.