Bargain hunters in search of the perfect beachfront "shack" in Eagle Bay and Dunsborough are re-entering the market in droves, encouraged by a drop from pre-boom prices.
Dunsborough house values fell 9.7 per cent in the year to March to a median price of $537,000 - and 26 per cent from the June 2007 peak of $735,000 - while the number of houses sold jumped nearly 30 per cent to 105.
In Eagle Bay, six multimillion-dollar properties were sold in the year to March, including two for more than $3 million. A five- bedroom two-storey property on Kestrel Drive, Eagle Bay sold for $4.2 million. Agents estimated it would have sold for $6 million at the height of the boom in 2007.
Property expert Gavin Hegney said he was asked constantly about the state of the South West market, suggesting a strong level of interest from would-be investors.
"The question is always when do you think the South West property market is going to recover," he said.
"Reading between the lines that means, 'I want to buy a house in this market'.
"It seems there is a lot of money waiting to go back into the South West market. Sales go up and six months later, prices go up."
Local agents say they have been buoyed by an increase in sales, which they attribute to strong local population growth as well as increased interest from buyers looking for a weekend property.
JMW Real Estate director Joe White said buyers have returned after the correction in the market.
But the bulk of the demand was from local residents, especially fly-in, fly-out workers.
"You don't need to be employed in Dunsborough to live in Dunsborough any more," he said.
Professionals Dunsborough director Garry Morris said prices were back at 2005 to 2006 levels.
"Those who missed out on Dunsborough the first time round can have a second chance," he said.
Stocker Preston director Louis De Chiera said his Dunsborough office has been busy, with strong demand at the lower and middle range of the market.
"It's still pretty slow in the rural residential market and large acreages are slow to sell," he said.
But he said even multimillion-dollar properties were selling as buyers realised it was a good time to get into the blue-chip market.
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