Conditions in Perth’s property market already favour first-homebuyers, and they could become more favourable if home owners are gripped by another bout of fear of not getting out (FONGO).
Perth’s property values have had the longest and deepest declines since the 1980s, with prices falling 17.8 per cent since peaking in June 2014, and experts are unsure if the market has reached its bottom.
Australian Bureau of Statistics data showed this week that Perth’s residential property prices fell another one per cent in the December quarter, and 2.5 per cent over 2018.
A discussion paper from the Reserve Bank last week warned if homeowners across the country believed prices were going to keep falling, and adjusted their 10-year expected real house price gain from 2.5 per cent a year to zero, real house prices could fall by another one-third.
AMP Capital chief economist Shane Oliver said such a scenario would risk FONGO taking over.
“The rental vacancy rate in Perth is now declining, which is putting upward pressure on rents, whereas in Sydney it’s still going the other way,” he said. “But Perth has had a few periods of false hope where it looks like the market’s bottoming out several times, and then it starts coming down again, so another round of FONGO takes over and homeowners say, ‘Oh I better get out’.”
Luke Whelan and fiancee Rachel Mackin Brown wanted to upgrade their first home, but after six months, FONGO lingers.
They paid in the low to mid $600,000 range for the two-bedroom townhouse in 2015 and are seeking the same price. “For now, we’re not willing to drop (the price),” Mr Whelan said. “We’ll look at it again in six to 12 to 18 months.”
Corelogic research director Tim Lawless said buyers were “in the driver’s seat” though only first-homebuyers were becoming more active.
“If we were going to see some panicked selling we would have seen it by now I think,” he said.