Confidence to return amidst affordability spike
With Perth now the most affordable capital city in Australia to buy a home, there hasn’t been a better time in a decade to purchase or build a house, say industry insiders.
In great news for homebuyers, the latest Housing Industry Association (HIA) Housing Affordability Index saw Perth continue to improve, with a 6.1 per cent gain during the March 2018 quarter, keeping WA’s capital at the top of the tree.
A higher affordability index result means a more favourable cost outcome.
HIA WA Executive Director John Gelavis said Perth was moving beyond a mining-fuelled market.
“Positive activity continues in the new home sales market, which is indicating Western Australia is past the worst and positive times lay ahead,” he said.
“In the case of both Perth and Darwin, the improvement in affordability is the result of dwelling price declines in both cities which have resulted from the natural resources investment downturns locally.
“These results suggest dwelling price growth prospects over the medium-term are brightest for cities like Perth and Darwin – and much more limited in Sydney and Melbourne.”
Based on a Domain House Price Report in March, Perth’s median house price was down two per cent at $553,486, while the national median house price fell to just over $800,000.
However, the pace of Perth’s annual decline is easing and the market seems to have bottomed out and is in the stages of a recovery phase, according to Aquila Homes Managing Director Domenic Nardelli.
“There definitely seems to be a level of confidence returning to the Perth market and I believe we will slowly begin to hear a gentle sigh of relief from builders and homebuyers across Perth,” he said.
“I don’t believe 2018 will be a year of rapid growth but it is shaping up to be the most positive year we have recently seen.”
With an Australian Bureau of Statistics report finding the number of houses approved for building in Western Australia fell by 6.7 per cent in trend terms during March 2018, the Perth housing industry remains combative.
Pindan Homes General Manager Simon Greenlaw said while it was an ideal time for homeowners to take advantage of faster and cheaper construction services, some building companies were finding it hard to compete.
“The housing industry is incredibly competitive at the moment. There is great potential for homebuilders to capitalise on added extras, bonuses and better-quality specifications, as well as quicker build times with more labour available,” he said.
“However, it does result in tight budgets and margins for builders, and we’ve seen the recent effect this has had on the industry, with a number of builders of all sizes having to close their doors.”
In more affordable times, Mr Greenlaw said supporting local producers was the best option.
“With the increase of imported products there is a lot more available to consumers then ever before and finding the balance of local versus imported product continues to affect the bottom line,” he said.
“Taking advantage of local goods and services may hit the pocket a little harder than cheaper imports. However, they are a far superior product and in the current climate homeowners should be looking at the quality of product, because you can build with all the luxuries for a fraction of the price than a decade ago.”
Mr Nardelli said there were many smart investors making the most of Perth’s market.
“We have recently seen a surge with established homeowners redeveloping their blocks,” he said.
“Savvy homeowners who purchased the knock-down home in recent years and have patiently waited are now capitalising on Perth’s current market to build their family home.”
Aside from market conditions, buying a house in WA has also been made more affordable thanks to State Government initiatives such as Keystart and the First Home Owner Grant (FHOG).
Unique to the Western Australian home loan market, Keystart aims to provide low-deposit home loans to those unable to meet the requirements from mainstream lenders.
The FHOG stands at $10,000, down from $15,000 last year, after the State Government reduced the scheme earlier than expected amid budget pressures.
Source: The West Australian