Perth's housing market is experiencing its most severe downturn in four decades, with median house prices falling 14.8% from their peak of $585,000 in November 2014, according to CoreLogic data. The slump, triggered by a collapse in population growth after the mining boom, has led to a surge in mortgage stress and a sharp decline in retail spending.
Real Estate Institute of Western Australia president Damian Collins said the decline has been gradual, contrasting with the volatile conditions in Sydney and Melbourne. However, Bankwest chief economist Alan Langford warned that Sydney's correction could be steeper due to its greater price imbalance relative to incomes.
The downturn has also hit the construction sector, with building approvals more than halving since 2014. CoreLogic head of research Cameron Kusher noted a significant slowdown in retail trade as households cut spending, a trend he expects to continue through the Christmas period.
Property commentator Gavin Hegney said that while prices may drop up to 20% from peak to trough, the real risk-adjusted loss for investors could be closer to 40% when accounting for inflation and opportunity costs. He pointed out that $1 million invested in Perth property in 2014 could have grown to $1.8 million in Sydney.
Transaction volumes have plummeted from 62,000 properties per year a decade ago to about 32,000 now, according to Mr Collins. He predicted it could take many years for turnover to recover, as high transaction costs deter homeowners from moving in a market with no capital growth.
