MARKET STARTS TO COOL
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.