Perth home prices have suffered a steep fall in October, dropping almost three per cent as the number of new dwellings on the market surge.
Housing stock is now at levels not seen since the global financial crisis as Australia’s resources hub struggles with higher unemployment due to the mining downturn.
The flood of residential property listings and price weakness has sparked fears property values will continue to fall into next year, with only four in 10 properties successfully selling at auction.
Perth dwelling prices dropped 2.8 per cent in the month of October, well down from a 0.9 per cent fall in September, figures released by CoreLogic RP Data show.
There are now almost 20,000 properties for sale in Perth compared to 23,700 in Sydney which has more twice the population.
Perth property listings are up nine per cent on a year ago.
National valuers Propell say it takes at least 85 days to sell a property in the West Australian capital.
“The recession in Perth, caused by the decline in mining sector employment, has impacted on property demand resulting in a surplus of supply,” Propell’s October Perth Residential Market Report says.
Perth’s exclusive riverside and beachside suburbs have been hit the hardest, with the western suburbs region suffering a 4.6 per cent price decline to a median price of $1.65 million in the past year.
The city’s residential property values have fallen 6.1 per cent during 2015 and are down 3.6 per cent on an annual basis, the RP Data figures show.
The Real Estate Institute of Western Australia (REIWA) says more than half of Perth vendors were forced to discount their asking price in the September quarter.
“Market conditions had an influence on selling days and discounting,” REIWA President Hayden Groves said.
Mr Groves said the number of properties for sale in Perth had reached levels not seen since immediately after the onset of the global financial crisis.
The Perth rental market was also suffering as the vacancy rate hit a whopping 5.6 per cent in the September quarter amid falls in rent prices and slowing population growth.
Property forecaster SQM Research predicts Perth prices will fall by four to seven per cent in 2016 if the Reserve Bank cuts interest rates by 0.25 per cent early next year.