Perth's median house price is expected to rise 12 per cent by 2010-11, although solid growth is unlikely over the next two years due to affordability constraints, according to a report from mortgage insurer PMI.
The group's residential property market overview said underlying demand in WA, boosted by interstate and overseas migration, was expected to reach an average of 25,000 dwellings per annum, which combined with a fall in housing starts this year would lead to a dwelling shortfall of 8,500 by June 2011.
The report said Perth's median house price fell 1.3 per cent last financial year, to $446,000, with affordability issues expected to dampen growth to 3.1 per cent in 2008-09 and 2.2 per cent in 2009-10.
However, prices are expected to strengthen in 2010-11, with a forecast rise of 6.4 per cent to bring the median price to $500,000.
The report also showed WA had the strongest growth in first homebuyer activity (19 per cent) of all the states and territories in 2007-08, attributed to stamp duty exemptions, while investor activity was down by 9 per cent - equal to New South Wales and the biggest fall nationally.
