A slow down of Western Australia's property market is inevitable and lower affordability may be the circuit breaker, according to Real Estate Institute of Western Australia president Greg Rossen.
A slow down of Western Australia's property market is inevitable and lower affordability may be the circuit breaker, according to Real Estate Institute of Western Australia president Greg Rossen.
A slow down of Western Australia's property market is inevitable and lower affordability may be the circuit breaker, according to Real Estate Institute of Western Australia president Greg Rossen.
Speaking at the Australia-Israel Chamber of Commerce breakfast at the Hyatt Regency Hotel this morning, Mr Rossen allayed speculation that WA's property market was showing signs of a major downward price correction.
"The outlook is damn good ladies and gentlemen...WA's fundamentals to 2011 are sound," Mr Rossen said.
"Since the 1990's we've only had one minor quarter decline in price and no significant downturn. None of these conditions [indicating a major downturn] exist at present."
His assurance follows yesterday's release of Australian Bureau of Statistics figures showing WA residential housing approvals falling 16.6 per cent to 449 in August this year, after reaching a peak of 820 in July.
Mr Rossen said WA had experienced a once in a generation boom across all sectors of the economy and the growth spurt, as evidenced throughout history, would last up to 25 years.
"The spin-offs of the resources boom to the property sector have been stunning. From sharing the lowest median in Australia with Hobart in June quarter 2004 of $255,000, Perth is now sitting at $403,000 for June quarter 2006, and will likely be revised to $410,000 once all the data is received," he said.
REIWA maintains the WA market will experience a number of small corrections over time resulting in price growth returning to more normal levels, resembling WA's past 15 year average of eight per cent.
Mr Rossen said people should not read too much into small downward price corrections as WA's economic fundamentals to 2011 were sound.
"The forecast is for the WA economy to grow another five to six per cent in 2006-07. This will be twice the national rate and follows on from growth of 14 per cent in 2005-06," he said.
This economic forecast coupled with continuing strong levels of housing expenditure, population growth of 162,000 over the next five years and demand for 20,000 new homes a year to 2011, all contribute to a positive outlook for the property market in WA, he said.
In the current cycle, however, he said the issue of housing affordability was emerging as a concern for first home buyers and investors, which would likely impact on rental prices.