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Watch Perth land values – Hegney

FORECAST building cost hikes in Western Australia this year could lead to a slump in land values, according to property analyst Gavin Hegney. The Hegney Property Group executive chairman believes an expected increase in building costs of 12 to 15 per cent over 2007 would place cost pressures on land values in the order of 4 per cent to 5 per cent a year. “When you combine these cost pressures with those put on the value of a price of a block of land from the skills shortage, there are no surprises that we must see values rise. The danger is that in some suburbs it is looking more like a buyers’ market and prices have fallen,” Mr Hegney said. “When you have building costs rising and falling total market values, something has to give, and in this instance it is the land value.” Despite this outlook, Mr Hegney said WA’s strong economic fundamentals and low unemployment rate of 2.7 per cent would ensure it remained Australia’s strongest state economy for the next two to four years. “Considering recent budgeted stamp duty relief for first-home buyers up to $500,000 and rapidly increasing rents, it is logical that the Perth market rebound could be both quick and significant,” he said. “It may just be a good time to have another look at the Perth market.” -Jenelle Carter

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