WITH LAND MARKET ACTIVITY HAVING PICKED UP PACE OVER THE LAST 12 MONTHS, STEVE ROBERTSON FROM PRM PROPERTY GROUP DISCUSSES THE THREAT OF A HOUSING SUPPLY CRISIS
With further evidence emerging of a healthy recovery in the urban development sector in 2013, the ability to adequately meet the expected demand for new housing in WA needs to be managed better.
History has demonstrated that in markets where demand outstrips supply, the risk of an unsustainable “merry go round” emerges. How quickly one can forget!
Should record population growth continue, or current migration levels maintain over an extended duration, it is inevitable that demand will increase in the WA housing market; exacerbating the already significant shortfall in housing in Perth.
The Perth rental market is already experiencing the effects of this strong population growth.
The ‘heat’ in the rental market has been building since early 2010. Whilst there has been a gradual upward trend in median weekly rent costs, the vacancy rate has plummeted from nearly five per cent in 2010 to below two per cent. Should this trend continue, the median rent will inevitably rise at a much greater rate, resulting in people looking at alternate housing options.
And with interest rates declining, it isn’t hard to understand why we have seen so many first home home buyers of late when the economics have moved more in favour of home ownership.
The median Perth rent is now just $38 per week less than a repayment for a basic 3×2 package currently available at Banksia Grove and interestingly $23 more than the reduced frontage average house and land packages
available within the estate.
However, frustrating the delivery of vacant land are the time and cost implications of bureaucratic processes being imposed on the whole industry (being land developers, builders, consultants and contractors). Also, often conditions attached to funding create inefficiencies and has a flow-on cost effect to the end consumer by virtue of pre-sale conditions.
It will only be through a cohesive and collaborative working relationship between the public and private sectors that could see time and cost efficiencies introduced to streamline and integrate the land and housing approval processes, and to ultimately, minimise any impact to the end consumer.
It is important that lessons learnt from previous cycles are not forgotten.