Perth markets humming as WA emerges from lockdown
Perth’s residential real estate market appears to have resumed its recovery as Western Australia emerges from lockdown, with weekly sales passing 1,000 for the first time since 2013 and the state government’s fast-tracking of planning reforms paving the way for a quick uptick in development activity.
Prior to the COVID-19 crisis, Perth’s property market had recorded four consecutive months of increases in median house price, its longest stretch of growth since 2014, according to data from CoreLogic.
That recovery was disrupted by the coronavirus pandemic, with dwelling values starting to fall slightly as unemployment in WA increased to the highest level of any Australian state.
Sales data for the week ending June 21 indicates that recovery could be resuming, as the state emerges from its coronavirus lockdown.
The Real Estate Institute of WA said there were 613 dwelling and 412 vacant land sales over the week, with the performance not only surpassing that of the previous month, but also the same time last year.
Land sales in particular are rising quickly thanks to the WA state government’s Building Boost, which comprises a $20,000 grant to anyone seeking to build a new house and is in addition to the federal government’s $25,000 HomeBuilder scheme.
“The schemes have certainly helped people who were undecided about a house-and-land package make their decision quicker, and we will likely see vacant land transactions remain at higher than normal levels until the end of the year when the scheme concludes,” REIWA president Damian Collins said.
Housing Industry Association forecasts also show the immediate impacts of the stimulus packages, with data backing up reports from builders of a major uptick in activity, as reported by Australian Property Investor Magazine earlier this month.
New forecasts released this week show the new home building sector in WA is expected to bounce back strongly over the next 12 months, ending a downturn that began midway through 2014.
HIA WA executive director Cath Hart said revised outlooks indicated building activity was expected to improve by 15 per cent on 2019-20, to just under 16,000 dwelling starts.
“We’re already seeing the positive impact of the Building Boost on jobs and activity, with the larger builders advising they expect all staff to have returned to pre-COVID hours by the end of June,” Ms Hart said.
“According to our latest industry-wide survey of WA’s residential builders, news of the Building Boost sparked a 132 per cent increase in the number of groups visiting display homes, and a 73 per cent increase in the number of qualified customer leads from just a week earlier.
“Importantly, the same data also revealed a slowdown in jobs starting on site, the first sign of the trough in sales during COVID manifesting as a contraction in construction, so the assistance measures couldn’t have come a moment later.”
REIWA’s Mr Collins said it was important to acknowledge, however, that vendors in Perth’s outer suburbs that built in recent years and suffered through the downturn now found themselves at a $45,000 disadvantage to the new build sector.
In the established market, transactions in Perth rose by 7 per cent over the previous week, following a 26 per cent improvement in the week prior.
“While things are looking positive for the property market, we hope that the recent market activity will not only lead to the recovery we have been waiting for, but also continue post the government schemes which end on December 31,” Mr Collins said.
Meanwhile, WA’s leading industry groups’ sustained lobbying has resulted in a major reform to the state’s planning and approvals system, changes which have been described as historic.
The WA state government last month announced a suite of changes to simplify approvals, cut red tape, increase support for small business and fast-track major projects.
This week, the government agreed to lower the minimum value threshold for major projects eligible for fast-tracking from $30 million to $20 million in metropolitan Perth, while regional projects valued at $5 million and up will be fast-tracked.
WA Premier Mark McGowan said with the legislation now passed, a new development application process would be introduced to support the state’s economic recovery.
Property Council of Australia WA executive director Sandra Brewer said the industry was “delighted” with the outcome.
“The lower $20 millon hurdle for projects to opt-in to the fast-track system will give even more Western Australians more opportunities to get back into employment quicker,” Ms Brewer said.
“This delivers certainty and promotes well-designed, high-quality projects and desperately needed employment opportunities.
“WA’s recovery depends on ensuring there’s a clear pathway for decision-making about complex developments with design and economic merit.”
Master Builders Association WA executive director John Gelavis also welcomed the changes, saying that a good planning system was the key to a healthy economy.
“Everything starts with a transparent, functioning and efficient planning framework, so we are pleased to see this Bill progress wit the support of industry and government, which will create important construction jobs, support many of 39,000 small businesses in the building and construction industry and contribute significantly to the state’s economic growth and prosperity,” Mr Gelavis said.