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Sales top eleven year high

THERE has been a big jump in house and land sales in WA according to the Department of Land Administration.

In November the total number of deals done was the highest in eleven years.

During the month, there were 7,933 property transfers recorded. This represents a 9 per cent jump on October, and an increase of 1,290 or almost 20 per cent for the year to 30 November.

The total value of sales completed in November was $1.35 billion.

Just over 2,500 of the settlements were for land or houses under $85,000, while there were 2,273 completed sales between $120,000 and $200,000.

Mortgages taken out to cover the November sales and refinancing came to $2.3 billion.

Westpac economist Harley Dale commented that the rise in finance was boosted by a surge in refinancing brought about by concern over further rises in interest rates.

An interest rate rise could be still on the cards in the new year with the housing sector contributing to inflationary pressures.

“By our estimate, house building costs added 0.2 per cent to underlying inflation in the September quarter, pushing the figure up from its previous total of 0.5 to 0.7 per cent,” Mr Dale said.

“For the December quarter CPI, to be released in late January next year, the housing sector could generate an unwelcome surprise for the authorities.

“Supply constraints are emerging, reflecting a rush to beat the GST and, not surprisingly, house prices are accelerating,” he writes.

DOLA’s director of service delivery Graham Searle said the figures reflected the high level of consumer confidence in the WA property market.

“A further indication of the strength of that confidence is the fact that our monthly figures have exceeded last year every month since April,” Mr Searle said.

Real Estate Institute of WA president Neville Fox said that it was not unusual for a rush of activity during summer, but the GST was affecting the normal pattern.

“It is too early to suggest that this represents a peak in the current housing sales cycle,” Mr Fox said.

While land and existing house sales seem to be strengthening, building approvals appear to have peaked.

In trend terms, dwelling approvals fell 0.2 per cent during the month. This follows eleven months of continuous growth that resulted in approvals still being 25 per cent higher than the same month last year.

The value of residential approvals was $246 million during October, up from $195 million in October 1998.

Master Builders Australia chief economist and deputy national executive director, Wilhelm Harnisch warned the high levels of activity represented a double-edged sword, with a high risk of a slump in the second half of next year.

“While builders are currently enjoying excellent trading conditions, the fear has to be that a slump will occur after 1 July 2000 when pent-up demand is projected to be

negative for some time,” Mr Harnisch said.

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