WESTERN Australia’s peak property industry group, the Real Estate Institute of WA, expects the State’s real estate market to continue its solid growth throughout 2004 in response to WA’s strengthening economy.
REIWA president Jim Henneberry said strong job growth and steadily rising population levels would convert to high demand for housing in 2004.
“The year ahead will continue to offer exciting opportunities for home buyers and investors without the hype and frenzy that was in the market in 2003,” he said
“The recent interest rate increases were anticipated by the market a long time ago when the Reserve Bank said that rates are likely to return to a more normal level.
“Even so, interest rates are still at a historically low and affordable level.”
Mr Henneberry said he expected the market would return to normal levels when interest rates levelled out early in the year.
“We expect an increase in first home buyers in the more affordable established housing market in 2004, resulting from growing delays and costs in the new home building sector,” he said.
REIWA has also forecast that the rate of growth in property values will ease in the year ahead.
Compared with the 20 per cent growth of Perth median house prices in the year to December 2003, Mr Henneberry said that, in 2004, the annual growth in median house prices in WA was expected to return to single digit figures.
The median price of an established house sold in Perth in November 2003 rose 3.1 per cent, to $228,500.
The gradual slowing of the WA real estate market is also reflected in the sales figures for November 2003, which show the rate of homes sold slowed from the mid-year peak, while stocks of available homes for sale continued to grow.
The level of homes available for sale remains below the long-term average of 12,000 homes, however REIWA has tipped that stock levels will return to normal levels by March or April this year.
Mr Henneberry said the new home building sector was going to be busy in 2004 completing homes ordered last year.
“This will create plenty of spin-off work in the established housing market as people relocate from their existing homes and move in and out of rental accommodation,” he said.
Housing Industry Association executive director John Dastlik was not as upbeat about the coming year for the new home and renovation sector, warning against a further lift in interest rates before the effects of last year’s 0.5 per cent rate rise was fully absorbed by the system.
According to HIA figures, building approvals in WA fell by 10.7 per cent in November 2003.
Mr Dastlik said a downward trend in approvals was evident in most States and Territories, and that this deteriorating trend had been reinforced by the November figures.
“There is little doubt that the industry has peaked and the fundamentals that drive housing and renovation demand point to a soft landing this year,” he told WA Business News.
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