December 1, 2012
Courtney Trenwith – Deputy Editor, WAtoday
The new year will bring more pain for the WA property market, with half as many houses to be built as needed and rents continuing their upward surge, a prominent analyst has told the industry.
Perth’s housing shortage will balloon to as many as 90,000 dwellings – an unprecedented level – in the next few years and will affect both rent and purchase prices, according to ANZ property research manager Paul Braddick.
Much of the issue was confidence as well as land supply.
The city’s rents already have risen 14 per cent this year to a median $450 per week but Mr Braddick is not alone in estimating they will continue to climb 10-20 per cent annually.
“If you’re a renter, it’s been a tough couple of years already since the GFC, unemployment rising and all of a sudden you’re facing 10-20 per cent increase in your rental bill, that is going to create issues for Australia’s most vulnerable households,” Mr Braddick said during his keynote speech at the Urban Development Institute of Australia WA luncheon on Friday.
“I think this is going to be a political issue for the next 5-10 years because as far as we can see it’s only going to get worse.”
About 1200 new people are moving to WA each week but only 18,000 dwellings are expected to be built next year, exacerbating the existing shortage.
“[WA is] delivering half as much stock as the market requires,” Mr Braddick said.
“[There is] a looming crisis in terms of supply. The numbers are quite frightening.”
Australian Property Monitors senior economist Andrew Wilson said there had been a solid lift in building approvals in recent months but it was not enough to keep up with record population growth.
The longer the present pace continued the worse the picture would become.
“Once you get behind the supply, it’s a very tough ask [to catch up to demand], particularly over the short-term,” Dr Wilson said.
The soaring rents are encouraging more people to buy their first home, helping the market recover slightly.
Perth’s median property price bottomed out at less than $400,000 at the end of last year, after two years of continued declines. It rose to $410,000 during the middle of the year but fell back to $400,000 in the September quarter.
Dr Wilson expects it to have risen 5 per cent in 12 months by the end of the year.
Real Estate Institute of WA figures indicate a much smaller increase.
Mr Braddick said Perth’s prices had returned to “fair value”.
Affordability in the city was still “a real issue”, but had “significantly improved” thanks to lower interest rates and higher salaries.
“We’re on the cusp of a recovery,” Mr Braddick said.