Industry figures have pointed to new statistics and recent market activity as evidence that the property downturn in Western Australia will be short-lived.
A slump in building approvals in Western Australia is a sign that the market is on the path to recovery, according to Peard Real Estate Group CEO, Peter Peard.
Mr Peard cited the latest ABS building approval figure for WA – 1,011 during January – as evidence that the market is starting to surmount its oversupply issues, arguing that a boom in new housing construction over the past three years had led to downward pressure on property values.
“The combination of this surge in the supply of new homes and a slowing in WA’s population growth rate has seen the median house price in Perth fall over the year by 5 per cent to $530,000,” Mr Peard said.
“This 1,011 in building approvals for houses during January 2016 compares with 1,584 during January 2015. Building approvals in WA for new houses have been on the decline since they peaked in July 2014, when 2,298 houses received building approvals.”
According to Mr Peard, the decline in building activity is part of the cycle, which should see the current glut of new homes being absorbed by the market.
“Over time, this will have a positive impact on established house prices by bringing a balance between supply and demand, and lead to a stabilisation in the Perth median house price in the medium term before a longer-term upswing in property prices,” he said.
It’s a sentiment shared by industry veteran and RE/MAX WA managing director, Geoff Baldwin.
“In regards to the current oversupply, buyers are now re-entering the market and we are also seeing more and more investors recognising the value around at the moment, and this increasing activity tends to have a snowball effect,” Mr Baldwin said.
“Once people see ‘under offer’ and ‘sold’ stickers appearing on signs they tend to move a lot more quickly, and historically this has resulted in a quick reduction in stock and more pressure on prices.
“It is inarguably a wonderful time for people to buy, however people thinking of buying or upgrading should do so in the short term rather than believing these conditions will last forever.”