April 20, 2014

Construction slump adds to affordability pressures

A photo of houses and money

Data from the Real Estate Institute of Western Australia are showing that the number of properties for sale in Perth has come down significantly and are now at their lowest level since April 2010.

The number of properties on the market including houses, units and land fell to 12,975 in early June. At the same time reported sales have been showing a steady increase as the market returns to average turnover levels.

REIWA Deputy President Ian Cornell said while it was a positive sign with confidence returning to the established market, storms clouds are brewing around housing supply in Perth.

“We have seen a dramatic collapse of building approvals for April following the introduction of the new Building Act on 2nd April,” Mr Cornell said.

“In recent weeks the Housing Industry Association has expressed deep concerns with new  government red tape which it believes is hampering the building sector and slowing the construction of homes.

“If this persists for a few more months we will see a fall in new dwelling starts for both the June and September quarters.

“This will ultimately lead to a supply imbalance that will, in turn, put pressure on established housing.  The knock-on effect will ripple through the existing residential housing market and put price pressure on both buyers and renters for the latter half of 2012.

“In April, building approvals slumped by an extraordinary 46.7 per cent, which means that buyers are now turning to the existing market and stock numbers are falling.

“Ultimately, this means that the increased competition for houses and rental properties on the market will push up the prices for both as we move into spring,” Mr Cornell said.

Mr Cornell’s concerns follow a Real Estate Institute of Australia report out this week which found that housing affordability in Western Australia fell by 1.2 percentage points over the March quarter.

WA and the Northern Territory were the only state or territory where affordability went backwards for the first three months of this year.

According to the REIA Housing Affordability Report the proportion of family income required to meet home loan repayments in WA is now 24.1 per cent.

Mr Cornell said that while this national report didn’t look too good for our State it was still a marginal improvement on the same time last year.

“Of more concern is the affordability pressure on people in the rental system. The proportion of income required to meet the median rent in Perth grew by 0.7 per cent in the March quarter and now stands at almost 21 per cent.

“The good news is that the number of first home buyers increased by 4.1 per in the quarter, up by a whopping 36.4 per cent on March last year,” Mr Cornell said.

The REIA Housing Affordability Report found there were 3,910 first home buyers in WA for the quarter with the average loan to this group increasing by almost 3 per cent to $287,800.

However, Mr Cornell, said it was concerning that the average loan to first home buyers was up by 6.5 per cent on the same time last year and that WA was the only state where average loans to first home buyers increased during the quarter.

“The REIA report also found that the total number of loans, excluding refinancing,  fell by 0.6 per cent to 12,018 loans, but which is still 10 per higher than the same time last year,” Mr Cornell said.

The Affordability Report found that the average loan in WA was $305,800, around 2.5 per higher than reported in the December quarter and 2.1 per cent up on the March quarter of 2011.

Mr Cornell said the increased buying activity and decreased construction activity was likely to be troublesome for the rest of the year.

“We need some affordability circuit-breakers from the state government, including adjustments to the rate of stamp duty and an urgent review of the new Building Act to ensure it frees-up the process for creating new homes to meet demand,” Mr Cornell said.

This article was originally published on reiwa.com.

Image by Images_Of_Money via Flickr.

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REIA: Government shifts responsibility for housing affordability to RBA

Australian Parliament; image by Michael Dawes

The Real Estate Institute of Australia has released this media release:

Real Estate Institute of Australia (REIA) CEO, Ms Amanda Lynch says the Government has failed to introduce any new initiatives to address housing affordability in this year’s Budget and has instead passed all responsibility onto the Reserve Bank.

“The good news is the Budget retains conditions where further rate cuts are possible. But as we have seen last week, there is no guarantee cuts will find their way to borrowers,” Ms Lynch said.

The Government has said returning the budget to surplus sends a very clear signal to the world about our strong economic fundamentals, and gives the Reserve Bank flexibility to cut interest rates further if it thinks that is needed.

Since peaking in the early nineties, home loan affordability has been trending downwards to alarming levels. Ms Lynch says first home buyers have been very cautious in early 2012, with the number of first home buyers as a percentage of total owner occupied housing commitments decreasing to 17.2 per cent in February, down considerably from the long-term average of 20.2 per cent.

“We had hoped the Government would recognise the need to directly intervene and not leave housing affordability dependent solely on the whim of the banks,” Ms Lynch said.

“One of the most effective housing policy instruments in assisting first home buyers is the First Home Owners Grant, but it has been allowed to lose more than half its value relative to purchase prices since it was introduced in 2000,” Ms Lynch added.

“The Budget might fund new cost of living relief for Australian families but it fails to address what most Australians see as a priority – housing affordability,” Ms Lynch concluded.

Image by Michael Dawes via Flickr.

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Three WA winners in National Awards for Excellence

Darwin, image by Yeowatzup

On 23rd March in Darwin the Real Estate Institute of Australia (REIA), held its seventh annual National Awards for Excellence.

Of the sixteen categories covering a wide range of real estate expertise there were three West Australian winners from among strong competition.

  • Provincial Real Estate in Kalamunda won the National Award for Small Residential Agency of the Year.
  • Realmark took out the National Award for Communications.
  • Dee Marlow, from Marlow’s Real Estate in Tuart Hill, won the National Award for Community Service.

This was a tremendous result for Western Australia, particularly as it has been a tough few years in the residential real estate sector.

Ben Ciacco Dee Marlow

I’m delighted to see our state punching above its weight in a hotly contested national competition. Our local winners are hugely deserving of their respective wins.

Realmark has repeatedly proven itself to be an excellent communicator, as illustrated through its website, quality printed materials and customer relations.

Provincial Real Estate has also shown itself to be a great success story in the hills area of Perth. It’s a relatively new company with a small team of staff, terrific marketing and strong community connections.

While Dee Marlow continues to inspire us all with her dedication, passion and astonishing fund raising success for the cause of autism.

Nominations to the National Awards for Excellence come forward from the winners in each category from the state-based competition, meaning that last night’s winners have shown themselves to be champions in their field both in Perth and across the country.

This article was originally posted on reiwa.com.

Darwin image by Yeowatzup via Flickr.

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