Perth house prices have fallen almost 10 per cent in the past year as the resources dependent West Australian economy takes a dive, National Australia Bank says.
Rising unemployment, slowing population growth, large numbers of homes on the market and an oversupply of rental properties are pushing residential house prices lower as the state's economy suffers under the weight of weak commodities prices.
Outgoing National Australia Bank chairman Michael Chaney said the West Australian resources sector was getting "harder by the week" and the consumer part of the WA economy was also suffering.
"The housing market here has fallen almost 10 per cent in the last year and is pretty soft," Mr Chaney told reporters in Perth after the company's annual general meeting on Thursday.
Mr Chaney, who is also chairman of retail giant Wesfarmers, said it was difficult to tell whether the WA economy had reached a trough.
"I do know that in the consumer area of WA it's tough and it's been getting tougher," he said.
WA's jobless rate hit a 13-year high of 6.6 per cent in November, up from 6.4 per cent the previous month, placing more pressure on an already weak housing sector.
Analysts say a cyclical housing downturn accompanied by rising unemployment in the range of 6.5 to seven per cent would be negative for a housing market such as Perth.
Mr Chaney added that the unemployment rate was the most critical variable for large mortgage lenders such as NAB as they assessed the risk of borrowers meeting their repayments.
It comes after the release of Reserve Bank of Australia figures this week showed Western Australia now leads the nation on mortgage defaults, with more than three per cent of the market in arrears or worse.
Mr Chaney said while West Australian home values remained under pressure, prices in the other states had held up as the mixed national economy grows below trend.
"Probably we won't see anything like the housing price growth we have seen in the past," he said.
SQM Research says there were almost 25,000 homes on the market in Perth in November, up from 23,400 in November 2014 as the city's rental vacancy rate rose to 3.9 per cent.
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