WA could experience predicted house-building boom despite reports confidence in property market is down – MacroPlan in the press

ABC News 
Sunday, 15 June 2014

WA could still experience a predicted house-building boom this year despite reports confidence in the property market is down, an expert has said.

Figures from the state’s Housing Industry Association (HIA) suggest more homes could be built in WA in 2014 than in any year on record.

The HIA said first homebuyers continued to be a major driver in the sector, with the $10,000 first homeowner’s grant, stamp duty relief and Keystart home loans enticing them into the market.

However, a survey by the Chamber of Commerce and Industry (CCCI) has found the number of people keen to buy property had fallen by more than half in the last six months.

Brian Haratsis, the executive chairman of Macroplan, a property economists and planners company, said it was possible to reconcile the seemingly opposing views because there are two different things happening at the same time.

As the mining sector stabilises, and people get a view that there is no further deterioration, confidence will actually come back because people won’t believe that there’s going to be a bust.

Brian Haratsis, the executive chairman of Macroplan, a property economists and planners company, said it was possible to reconcile the seemingly opposing views because there are two different things happening at the same time.

“Firstly, population growth is proceeding at almost historic highs, at around about 3.2 per cent per annum, so there are first homebuyers and there are people that need houses,” he said.

“In fact, WA has the highest percentage of people moving into working age in Australia, double Queensland, and that’s why the first homebuyer market and that fringe land market are doing well.

“But, at the same time, what you’ve got is a slowing mining sector, reduced number of contractors, reduced FIFO, so what we have here is a situation where the apartment market is beginning to soften.”

Mr Haratsis said the net effect of that is not a lot of apparent confidence but a lot of action on the ground.

He also said West Australians have an absolute understanding of mining and its economic cycles.

“As the mining sector stabilises, and people get a view that there is no further deterioration, confidence will actually come back because people won’t believe that there’s going to be a bust,” he said.

HIA state executive director John Gelavis said record low interest rates and strong population growth combined with first home buyers incentives would result in continued growth in house building.

“What we’ve seen is a strong increase to the housing starts from 2012-13, that’s going to continue into 2014, and also 2015 at relatively solid levels,” he said.

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Housing industry ‘driving’ WA economy

There have been loans for about 6,850 new homes obtained so far this year, compared to about 6,000 last year, according to Australian Bureau of Statistics figures.

Mr Gelavis said the housing industry was playing a key part in driving the WA economy.

“Since the mining investment has cooled, the housing industry has certainly taken the lead in activity to provide opportunities for Western Australians from an employment perspective,” he said.

Meanwhile the CCCI survey found only 22 per cent of WA households thought it was a good time to buy property, compared with 40 per cent in December last year.

The CCI’s John Nicolaou said the survey of 400 people suggested that people were hedging their bets when it came to property, despite interest rates being at near-record low levels.

“Consumers are far more cautious in purchasing that new home,” he said.

“That really comes down to concerns around the future outlook of the WA economy, and the uncertainty that’s come with those concerns as well as the challenges that are perceived from a political dimension.”

Aerial-view-of-a-Perth-Suburb

 

 

 

 

 

 

 

 

 

 

 

 

 

 

About MacroPlan:

MacroPlan’s experienced and qualified economists align their understanding of macro-economic forces with micro-economic variables such as geographic and industrial characteristics, demographics, labour market shifts, resource demand and commercial realities.  Contact Brian Haratsis, Executive Chairman today to discuss your property research requirements.

Brian Haratsis
Executive Chairman
E: haratsis@macroplan.com.au
P: 03 9600 0500
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