MAR­KET STARTS TO COOL

Southern Gazette (South Perth) - - Residential -

THE WA hous­ing sec­tor is ex­pected to re­main strong for the re­main­der of 2014/15, al­though it will not sur­pass last fi­nan­cial year’s record ac­tiv­ity, ac­cord­ing to the Hous­ing In­dus­try Fore­cast­ing Group.

The group, com­pris­ing hous­ing in­dus­try and govern­ment rep­re­sen­ta­tives, pro­vides in­de­pen­dent fore­casts on the WA hous­ing sec­tor.

It has pre­dicted a 14 per cent re­duc­tion in dwelling com­mence­ments in the cur­rent fi­nan­cial pe­riod as a re­sult of slow­ing pop­u­la­tion growth and a weak­en­ing econ­omy.

“How­ever, with the strong car­ry­over of build­ing ap­provals into 2014/15, to­tal dwelling com­mence­ments for the year are fore­cast to still be at a rel­a­tively high level of 25,000, down from 28,966 in 2013/14,” chair­man Ste­wart Darby said.

But the group said af­ford­abil­ity re­mained a sig­nif­i­cant is­sue for WA house­holds on low or mod­er­ate in­comes, de­spite some falls in rents and house prices across the State.

“In the June 2014 quar­ter, a Perth house­hold on the es­ti­mated me­dian in­come of $85,600 would have been able to af­ford a prop­erty val­ued at $400,000 if they were to pay no more than 30 per cent of their in­come in re­pay­ments,” Mr Darby said.

“This was well be­low the me­dian house price of $545,000 or the lower quar­tile price of $435,000.”

The group also said the prob­a­bil­ity of in­creased un­em­ploy­ment and un­cer­tainty around in­ter­est rates next year would likely cause a con­tin­u­a­tion of al- ready weak con­sumer con­fi­dence, which would re­sult in a fur­ther 10 per cent de­cline in hous­ing ac­tiv­ity with around 22,500 dwelling starts in the 2015/16 fis­cal year.

The group also found Perth’s land mar­ket had cooled from the record lot sales of 2013, with sup­ply now at more sus­tain­able lev­els and blocks be­com­ing avail­able within six months of con­tract.

Mr Darby es­ti­mated WA would need more than 18,000 ser­viced lots in 2014/15, with some sourced from de­mo­li­tions and va­cant land list­ings.

“But this in­crease in new dwelling in­vest­ment has not flowed through into the es­tab­lished hous­ing mar­ket, which has seen sales ac­tiv­ity trend­ing down over the past 18 months,” he said.

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