IT IS THAT TIME AGAIN. EVERY THREE MONTHS PROPERTY INFORMATION PROVIDERS PUBLISH THEIR ESTIMATES OF WHICH DIRECTION HOUSE PRICES ARE HEADING AND ONCE AGAIN WE ARE LEFT WITH A WIDE RANGE OF NUMBERS.
Although the main house price measures continue to show significant divergences quarter-to-quarter, they do follow a broadly similar pattern on an annual basis as indicated by a short summary put together by Westpac, which shows a general upward trend in Perth house prices since mid-2012.
On Thursday, REIWA published their June quarter figures that showed there was a 1 per cent fall in the June quarter median house price during the three months to July. This puts the current median house price at around $520,000, which is up from around $485,000 or 7.3 per cent over the last 12 months. Rather than trying to apply complex methodologies that look at the different characteristics of homes that sold. REIWA respectably publishes estimates of the median price of all houses sold in Perth in a given quarter by drawing on the latest settled housing sales data, ranking all sales from high to low and plucking out the middle.
The ABS published their house price data yesterday, which reported that Perth house prices increased 3.4 per cent over the June quarter and 11 per cent over the year. The Bureau of Statistic’s price index is weighted according to attributes that can be broadly defined as the structural, locational and socio-economic characteristics of suburbs by also drawing on settled sales data. The majority of the time, the median price and index move in the same direction in similar magnitudes but this is not always the case.
The Australian Property Monitors also publishes estimates that are quite similar in methodology to ABS. But unlike the ABS, APM report their estimates in dollar terms. According to their latest report, Perth house prices increased 3.2 per cent over the quarter and 7.5 per cent over the year to a median of $544,000. Perth unit prices increased 2.5 per cent QoQ and 9.3 per cent YoY to $354,000.
Residex figures, meanwhile, showed a 1.8 per cent rise in the Perth median house price over June quarter and an 8.2 per cent increase over the past 12 months to $505,500. Residex uses a “repeat-sales index” which examines purchases and sales of the same properties over time.
Whilst the methodologies are different, one common feature of these four aforementioned figures is that they are revised each quarter. Therefore, the June estimates will be updated in three months time as more properties sold in that quarter reach settlement. The lack of revisions is, however, just one aspect that setsRP-Data figures apart: it is computed daily and thus has very large variations month-to-month and quarter-to-quarter. As of today, Perth house prices increased 3.8 per cent over the last three months and 10.4 per cent over the year.
Overall, whether it’s 7 or 11 per cent, the increase in Perth house prices over the year is relatively subdued compared to recent upswings – especially given the 30 per cent plus increase in turnover – and is a reflection of the much talked about decline in appetite for taking on larger and larger mortgages. Indeed, the average housing loan increased just 5.5 per cent over the last 12 months compared to annual increases between 7 and 20 per cent throughout most of the last decade.
