Perth is set for a “prolonged slump” due to an oversupply of property and a weak economy, according to one market analyst.
Simon Pressley from Propertyology said Perth sales volumes peaked two years ago and the numbers since have steadily declined.
The level of new supply in the pipeline is at record levels, while Perth already has the highest vacancy rates of all Australian capital cities, he added.
“Propertyology’s reading of key metrics suggests that Perth property values are likely to end this year below where they started the year,” Mr Pressley said.
“Put simply, neither property values nor rents have any pressure currently being applied.”
Mr Pressley said the bigger concern for Perth concerns demand as there has been a sharp decline in the number of people relocating to the city in the past 12 – 18 months.
He also noted that Perth’s economy has been struggling due to falling iron ore prices and the dearth of new mining projects.
“To the current state government’s credit, there are an unprecedented number of large projects in metropolitan Perth,” Mr Pressley said.
“These big projects will ensure that new jobs will continue to be created in Perth. But the rate of job growth has definitely slowed down and government finances are likely to remain tight for some time.”
Mr Pressley said it would be wrong to think that Perth was experiencing nothing more than a lull.
“Something significant will need to come from left field to stimulate housing demand otherwise Perth looks headed for a prolonged slump,” he said.