Perth housing market on the rebound but builders yet to feel benefits
Confidence in Perth’s housing market is up, but not everyone is feeling the benefits.
Land market data for the March 2018 quarter released this week by the Urban Development Institute of Australia WA shows an increase in new land values and sales numbers.
Institute chief executive Allison Hailes said the average price of new land in Perth was up 4.9 per cent over the last 12 months to $235,000 which was a promising sign of recovery.
“While the number of lot sales remains down on last year, the quarterly results are promising, with a 1.6 per cent rise in the number of new lots sold during the March quarter, the third consecutive quarterly rise in a row,” she said.
Ms Hailes said they were particularly excited by the number of lots under construction, which experienced a 36.8 per cent increase.
“Increased construction activity is a clear sign of developers’ confidence in the market, and this indicates they are obviously expecting buyer demand to increase over the year,” she said.
The data suggests construction activity is exploding in the north-west corridor with a 28.3 per cent increase in the share of all sales in the Perth metro area. The south-west corridor was second with 25.2 per cent market share.
The average lot price in the north-west corridor was $238,000 while the average price of new land in the south-west corridor sat at about $225,000.
“The current value of greenfield land across Perth provides a fantastic opportunity for those in a position to buy,” Ms Hailes said.
“There is also a diversity of housing product on offer in today’s greenfield markets, from apartments and townhouses, to the larger more traditional family blocks.”
Confidence hasn’t laid any bricks
While there are plenty of lots in the pipeline it hasn’t translated to construction activity, which according to Housing Industry Association WA executive director John Gelavis is still at an all-time low.
Mr Gelavis said the latest ABS data saw building approvals at about 1200, the lowest it’s been for quite some time.
“We think that there are levels of confidence out there, but that’s not certainly translating into housing sales and building approvals quite yet,” he said.
Mr Gelavis said the industry was reeling from a huge uptick during the boom and needed some support from the state government.
“The industry has a number of years of significant growth; through 2013-14 we saw a peak in residential commencements of around about 32,000 which we’ve never been at since HIA has been collecting data,” he said.
“Subsequently we’ve seen a dramatic decline in commencements, through to an all time low where we’re sitting at the moment.
“We’re anticipating an improvement in conditions over the next two or three years but it’s going to be a slow return to growth.
“We need to kick on the housing market and we will need to talk further with the government on what sort of stimulus will be required in the next budget cycle.
“That might need to be an increase of the first home owners grant.”
REIWA data for the March quarter showed first home buyers were active in Perth’s property market with an increase in sales for properties priced $500,000 and below.
There were 5865 dwelling sales during the quarter and a 5.7 per cent increase in sub-$500,000 sales.
There were 14,413 properties for sale in Perth at the end of the quarter and it took 67 days on average to sell a house.
REIWA president Hayden Groves said after subdued first home buyer activity during the December 2017 quarter, it was pleasing to see the lower end of the market strengthen.
“The final quarter of 2017 saw the composition of the Perth market shift. Last quarter there were significantly more sales in the higher priced end of the market and less in the first home buyer price range,” he said.
“It’s been a different story this quarter, with the balance of sales shifting back to the lower end of the market,” Mr Groves said.