This article is from the Australian Property Journal archive
PERTH’S median house price would need to grow by 4.3% annually over the next decade for buyers to justify a purchase against renting, according to new research from the REIWA and Curtin University.
Their first quarterly Buy-Rent Index, covering the June 2017 quarter, takes into account current variable including the current metropolitan region median house price of $508,000, which has grown 6.9% annually since mid-2002, and the median house rent of $360 per week.
It also considers the 10-year average mortgage rate of 6.69% and 10-year average Perth inflation rate of 2.29%.
The figure of 4.3% is down from the peak of circa-4.4% in June 2016, beginning from mid-2011. The lowest price growth required was around 3.7% in September 2012.
The latest data from SQM Research showed prices continued to tumble in Perth, with a drop of 4.1% and 7.4% for houses and units respectively in the 12 months to August, to go with a 2.0% decrease in listings.
It also showed Perth rents have also continued to fall, down a remarkable 34% from their peaks in March 2013. They fell by 2.1% for houses and by 1.5% for units over the 30 days to September 12th, and 5.1% and 7.1% respectively over the past year to $413.8 per week and $322.7 per week.
REIWA CEO Neville Pozzi said the Institute was thrilled to have collaborated with Curtin University to help educate and inform the public on the costs and benefits of home ownership versus renting.
“Curtin’s vast academic knowledge has enabled us to harness our research capabilities to produce this helpful tool. In the current economic and property climate, we recognise it can be difficult for West Australians to determine whether or not they should buy or rent. This Index will provide prospective home owners and renters with an insight into whether it is a good time to buy or rent based on trends in the current market,” Pozzi said.
J-Han Ho, a property researcher and senior lecturer in the School of Economics and Finance at Curtin Business School, said many households only focus on the location and price of the property when looking to buy.
“(However) this shows there are many other factors that need to be considered including interest rates, opportunity cost of capital and the property being a long-term investment. Buying at the right time can achieve a superior outcome to buying in the right location.” Pozzi said.
Australian Property Journal
