THE WESTERN AUSTRALIAN RESIDENTIAL PROPERTY SECTOR IS CONTINUING TO MOVE STRONGLY WITH THE NUMBER OF LOT SALES IN UDIA’S WEEKLY SNAPSHOT TRENDING UPWARDS. FOR THE LAST THREE WEEKS SALES HAVE BEEN SITTING AT OR ABOVE TREND, WHICH IS UNUSUAL FOR JULY WHEN THE COLD WEATHER TENDS TO DAMPEN THE ENTHUSIASM FOR HOUSE HUNTING.
The effect of last year’s record sales of developer lots is now translating through the construction data. ABS data released this month shows that the number of private sector houses commenced in Western Australia during the March quarter rose 2.5% (original data) and 8.2% (seasonally adjusted). All private sector dwelling units (including houses, apartments, units etc) went up 7.5% to 7,348 (original); the highest on record. That translated to an 11.9% in the seasonally adjusted figures so the building market is certainly continuing to flourish. The surge in WA pushed our private sector home commencements past the peak experienced during the boom, whilst other states levelled off or fell this quarter.
It is little wonder, with commencements at record levels, that the number of housing finance commitments for the construction of new dwellings in WA are also high; in May they jumped 28% to 1,945, the highest on record and nearly double the ten year average of 1,082 (original data). Financing for the purchase of established dwellings rose 10.4% over the month.
Dwellings (of all types) purchased by first home buyers represented 23% of total dwellings financed this month, very close to the long term average of 22%. The proportion of first home buyers peaked in September 2009 when the GFC and the FHOG boost combined. The loan size in May rose a slim 0.3% for first home buyers to $337,400 with the average loan size for non-first home buyers 6% less at $317,500.
It was interesting to note that overall, the average loan size for the construction of new dwellings in Western Australia rose 1.7% over the month to $292,800 with the average loan size for the purchase of an existing dwelling increasing a similar amount (2%) to $327,700, the highest on record.
If this is the bottom of the annual residential property cycle, it is going to be an interesting summer. If you want get into the property market or expand your portfolio, chances are you will approach a bank as they have a 93% share of the housing finance market. The remaining 7% is shared between other lenders including wholesale lenders and Permanent Building Societies.