Sentiment, affordability rises in WA

The WA housing sector has hit new highs in buying sentiment and affordability.

According to banking and analyst reports, strong growth in the housing sector — with established housing prices rising 29 per cent in the past three years — is being underpinned to some extent by a tightening rental market and pre-goods and services tax buying.

The Challenge Bank index of house buying sentiment has hit a new record and affordability remains near record levels.

A Challenge Bank report said, while a deceleration in the state economy will be a negative, these other factors will support continued momentum in housing activity in WA in 1999.

House prices in Perth continued to surge in 1998 and, while conditions remain favourable, the widening gap between established and new houses will push buyers into new houses and constrain rises in established house prices.

The Challenge-MI Index of house-buying sentiment for WA rose 2 per cent in the March quarter from 173.3 to 177 and is now at an all time high.

After easing slightly in 1998, housing affordability for established houses climbed slightly in the second half of the year.

The index rose 0.4 per cent in the December quarter to come in close to the December 1997 record level.

The index for new houses rose by 1.5 per cent in the December quarter to 319.1, also close to the record level.

This strength in affordability will have a positive effect on housing demand in 1999, the Challenge report says.

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