GST blamed for slowdown

THE GST has resulted in the WA property industry enduring two of its slowest months on record, according to figures from the Department of Land Administration.

DOLA data shows property investment fell 69 per cent in July with a further 51 per cent drop in August.

Chesterton International director Ian Mickle said the value of WA property sales fell from $2,064 million in June to $648 million in July before rising to about $1,000 million in August.

“July and August were two months I would rather forget,” Mr Mickle said.

“Primarily the slow start to the new financial year is a correction for the pre-GST buying frenzy.

“During May and june the market boomed to beat the introduction of the GST, July and August were expected to compensate for the increased spending.”

Jones Lang LaSalle research analyst Frank Sorgiovanni said the next six months would be quiet.

Mr Sorgiovanni said his agency found sales across the board had dropped since the GST’s introduction.

He believed interest rate uncertainty was causing some investors to wait until conditions had settled.

The Perth market is also failing to spark the interest of fund managers, with funds channelled to Sydney and Melbourne. However, Mr Mickle believed September would recover as GST concerns continued to fade.

He said Chesterton had already witnessed more astute investors pre-empting the market revival and negotiating quality properties with relatively low competition.

“While enquires for September remain below where we would like them to be, market interest appears to be gaining strength,” Mr Mickle said.

“Overall underpinnings of the property market are sound, direct vacancy levels in the CBD are at the lowest level for 10 years at 8.7 per cent and rental rates are continuing to climb.

“Although concerns over possible interest rate rises still exist, we believe the slowdown is a temporary lull in an otherwise strong market.”

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