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Confidence returning to building industry

PROPERTY figures from two government agencies suggest the sector has more than recovered from its post-GST slump and is headed for a period of prosperity, according to leading property organisations.

The Australian Bureau of Statistics’ latest figures show building approvals for June were up 11.2 per cent compared with May.

The 1614 approvals, the bulk of which were for private residential projects, have a total value of $282 million.

And the Department Of Land Administration June business activity profile has detailed a jump in activity, with the average daily number of document lodgments rising to 1586.

The average is the second highest in the past six years (the highest was in June 2000 when there was a flurry of activity to beat the introduction of the GST).

For the entire month there were 31,716 documents lodged, however Real Estate Institute of WA public affairs director Lino Iacomella said the most important figure to consider was the number of June transfers, which stood at 8215.

“This equates to the number of property transactions ... the majority of which are sales of homes. It’s a good indication there has been an improvement in the property market, especially in the residential sector” Mr Iacomella said.

He expected that, while the high level may drop slightly in the coming months, the sector was past the GST slump and headed for a strong cycle.

Interest rate cuts earlier this year, combined with the First Home Buyers’ grant scheme and a degree of pent-up demand, would result in the number of monthly transfers level ranging between 7000 and 7500.

“There were quite a few people who held off buying or building until after the GST to see what effects it would have, and they are starting to come into the market now,” Mr Iacomella said.

“But winter months are usually the quieter part of the year and I think we will see this reflected in slightly lower sales in the September quarter, but they will come back over summer.”

Chesterton International mana-ging director Graham Iddles said the figures highlighted the sector’s roller-coaster ride during the past financial year.

“Following the introduction of the GST the market was severely depressed for some time. On the whole, the year was extremely tough for everyone in property,” Mr Iddles said.

“However, of late, the turnaround has been dramatic.”

Another figure Mr Iddles found of interest was the June average of daily searches at DOLA, which stood at 5596, the highest level ever recorded.

“This figure gives a strong indication as to the amount of current interest in property compared to other sectors of investment and is an encouraging indicator for the market’s future performance,” Mr Iddles said.

Property Council of WA policy and communications officer Geoff Cooper agreed the figures indicated better times ahead for the industry but suggested activity in the sector would be increased further if stamp duty was abolished.

“Stamp duty is restricting people in their ability to allocate their resources efficiently … if it were removed I believe we would see a greater degree of activity,” Mr Cooper said.

Housing Industry Association executive director John Dastlik also held a positive outlook for the future of the industry, provided the First Home Buyers’ grant was extended.

“There is a lot of good news for the property market … which is good news for the State,” Mr Dastlik said.

“A good property market has major benefits for the WA economy because of its flow-on effects to other industries.

“It is therefore critical that the revised First Home Buyers’ grant be extended to ensure first home buyers continue to be attracted to new homes, which results in money being put back into the economy and jobs being created.”

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