PERTH MAR­KET RE­COV­ER­ING

HOUSING CON­STRUC­TION DRIVEN BY FAVOURABLE GOVERN­MENT IN­CEN­TIVES

Canning Times - - RESIDENTIAL -

THE Perth prop­erty mar­ket is in re­cov­ery mode and tipped to draw buy­ers back, ac­cord­ing to a new re­port.

Res­i­den­tial Prop­erty Spot­light: Perth, com­piled by prop­erty in­vest­ment con­sul­tancy Mo­men­tum Wealth, an­a­lysed the key de­mand and sup­ply in­di­ca­tors in­flu­enc­ing prop­erty prices.

It con­cluded the worst was be­hind the mar­ket fol­low­ing a three­year cycli­cal down­turn where sup­ply out­weighed de­mand amid record-high housing con­struc­tion and slower pop­u­la­tion growth.

Mo­men­tum Wealth man­ag­ing di­rec­tor Damian Collins said sup­ply and de­mand were start­ing to re­bal­ance, which would help buoy prop­erty prices going for­ward.

“On the sup­ply side, the re­port shows that the num­ber of prop­er­ties for sale has hit a two-year low; mean­while, the amount of new prop­er­ties be­ing built has re­turned to av­er­age lev­els af­ter dwelling starts hit a record high in 2015,” he said.

“Af­ter three years of an im­bal­ance, this tight­en­ing of housing stock will al­low de­mand to catch up to sup­ply and sub­se­quently will help un­der­pin prop­erty price growth going for­ward.”

The record-high housing con­struc­tion in 2015 was driven by favourable govern­ment in­cen­tives for first-home buy­ers to build rather than buy es­tab­lished stock, while de­mand was weaker fol­low­ing slower pop­u­la­tion growth in the af­ter­math of the re­sources con­struc­tion boom.

The re­port said this cre­ated a sig­nif­i­cant im­bal­ance with sup­ply out­weigh­ing de­mand, but this was now start­ing to equalise.

As well as the im­prov­ing sup­ply-side fun­da­men­tals, there was also in­creas­ingly favourable signs on the de­mand side.

“The re­search re­port ex­plains that although Perth’s pop­u­la­tion growth has slowed fol­low­ing the end of the re­sources con­struc­tion boom, it’s ex­pected to re­bound as the city’s labour mar­ket con­tin­ues to strengthen,” Mr Collins said.

“Add to this the city’s en­cour­ag­ing housing af­ford­abil­ity, which is the sec­ond best in the na­tion only be­hind Ho­bart, and the re­port ex­plains that more buy­ers will in­creas­ingly re­turn to the mar­ket as job sta­bil­ity firms and the econ­omy con­tin­ues to gain mo­men­tum.”

This in­cluded in­vestors, who typ­i­cally com­prised one-third of the Perth mar­ket but had dropped to one-quar­ter of buy­ers in the re­cent down­turn, ac­cord­ing to the re­port.

“As the jobs mar­ket con­tin­ues to ad­just in the af­ter­math of the re­sources con­struc­tion boom, we can ex­pect buyer con­fi­dence to re­turn to nor­mal lev­els and strengthen as the lo­cal econ­omy di­ver­si­fies into tourism, agri­cul­ture, tech­nol­ogy and ed­u­ca­tion,” Mr Collins said.

Damian Collins.

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