From doom to boom
AFTER predicting a large 10 per cent fall in national property prices from the peak in April 2020 to June 2021, Westpac has revised its forecast to a more moderate 5 per cent, with prices then “surging” 15 per cent until mid-2023.
After languishing in the doldrums since 2014, Perth is one of the markets set to lead the recovery with a growth rate of 18 per cent predicted.
Reiwa president Damian Collins said with low interest rates, record-high housing affordability and a shortage of property, price growth in Perth was quite foreseeable.
“It won’t be excessive, but I wouldn’t be surprised if we got 3-5 per cent between now and June/July 2021,” he said.
Westpac chief economist Bill Evans said the national recovery would be supported by sustained low rates — which were likely to be even lower than current levels — ongoing support from regulators, substantially improved affordability, sustained fiscal support from both Federal and State governments, and a strengthening economic recovery, particularly once a vaccine becomes available, which Westpac expects in 2021.
Mr Collins said population growth would also boost the Perth market, particularly with people returning to WA from overseas needing housing.
“The WA government has been asked to take in another 500 people per week and while not all of them will stay in WA, we will also have Western Australians coming back from over east, and I’m not sure where they’re going to be housed,” he said.
“We already have a massive rental shortage, a shortage of houses available for sale and we’ve been building very low numbers of properties over the last three or four years; while the building grants have been helpful in getting new supply, most of it has been used by first-home buyers in the outskirts, not nearly enough has been used in infill areas.
“We’re going to see a really challenging environment where demand will outstrip supply and we would expect to see price growth.”
Under these conditions, Mr Collins said Westpac’s 18 per cent forecast over the next three years was possible, but perhaps not as exciting as it sounded. “You’ve got to remember we’re down 20 per cent or more from the highs five years ago, so even an 18 per cent rise is going to be struggling to get us back to where we were,” Mr Collins said.
“It’s always hard to predict the future with any certainty, but given where we sit at the moment, if we continue to get population growth, the mining sector remains strong and we remain relatively free of COVID, then it’s certainly in the realms of possibility.”
The rental shortage recently saw more than 30 renters lining up to inspect a vacant apartment in the NV Building on Murray Street, Perth.