Western Australia’s property downturn has caused a spike in the number of homes falling into negative equity, with about one in 20 now worth less than their purchase price, a new report reveals.
The state has the second highest number of homes with negative equity (4.9%) in Australia, according to the RP Data annual Equity Report. The national average is 3.7 per cent.
The latest RP Data figures show that home price in Perth fell 7.1% over the last year.
Meanwhile WA Supreme Court statistics show that more than three homes are being repossessed every day, totalling 1,242 last financial year – a 28% increase on the year before.
The RP Data report says WA’s recent property price declines have largely contributed to the state’s high level of negative and low equity.
According to RPData www.rpdata.com, Perth’s median house price at the end of August was $450,000, down 7.1% over the last year.
About 30 per cent of WA home owners have less than 25 per cent equity in their property, according to RP Data, which does not take into account property owners’ mortgage levels.
The figures are worse for home owners who bought since 2008, with 9.6 per cent of their properties worth less than the purchase price and three-quarters with less than 25 per cent equity.
However, WA also has an above-average level of full home ownership, at 47 per cent compared to the national average of 45 per cent.
On average, WA homes have 80.7 per cent equity, or $191,859, with properties typically held for 5.9 years.
That compares to Victoria, where the average equity is 110.4 per cent, followed by Tasmania (85.6 per cent). The lowest average equity is in Queensland (54.9 per cent) and South Australia (56.1 per cent).
The state’s South Eastern region, covering Kalgoorlie-Boulder, Esperance and Ravensthorpe council areas, has the second highest rate of negative equity in Australia and the highest in the state, with 11.2 per cent.
The median house value there is 3.5 per cent lower than the peak in 2008, according to RP Data.
Other areas with poor performance are the South West (9.8 per cent), Lower Great Southern (9.8 per cent), Upper Great Southern (8 per cent) and the Kimberley (7.2 per cent).
At the other end of the scale, the majority of homes (58 per cent) in the region covering the Far North, the Pilbara and the Batavia Coast had at least doubled in value since their last purchase, making it the second best performing region in the country.
It was followed by the Upper Great Southern region (55.5 per cent) and Central WA (52.5 per cent).
However, the state property market recorded its first positive sign that things were moving up in August, with official Landgate figures revealing a 20 per cent increase in sales compared to the month before.
Nearly 5,900 properties settled during the month in what was the largest increase in activity in six years. The number of sales was 23.9 per cent more than in July and a 4.1 per cent more than 12 months earlier.
Source: WA Today
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