The Urban Development Institute of Australia (UDIA WA) has revealed positive new research for the new year that provides a confident basis for estimates that the next residential property market upswing in Western Australia will occur within 12-18 months.
“UDIA has undertaken research to track property market cycles in WA over the last thirty years which has revealed the average length of a property market cycle in WA during that period was five years from ‘trough to trough’,” UDIA WA CEO Tanya Steinbeck said.
UDIA also tracked the impact of mining exploration expenditure on dwelling commencement figures which uncovered a very clear relationship between the two, particularly since 2007.
“We have noted that there has been a distinct two year lag between an uplift in mineral exploration expenditure and a corresponding uplift in dwelling commencement figures in WA,” Ms Steinbeck said.
“Therefore, based on the current mineral exploration expenditure figures, UDIA estimates the next market uplift will occur in the next 12 to 18 months,” Ms Steinbeck said.
“Based on our broader market cycles research, we can also expect that the next peak in dwelling commencements across the state to occur between mid-2020 and 2022,” Ms Steinbeck said.
MORE DETAIL ON THE RESEARCH:
UDIA analysed Australian Bureau of Statistics (ABS) data on WA dwelling commencements, building approvals and dwelling finance commitments over the last three decades to get a true picture of how the current market downturn compares with previous market cycles.
“Property market cycles in WA have spanned between 4.5 to 8.75 years, with an average of five years over the last thirty years,” Ms Steinbeck said.
“While the current downturn has extended for a longer period of time than many might have expected, it sits well within the average time range of historical market cycles,” Ms Steinbeck said.
“The length of the current downturn is, in part, due to the 2014 peak being the highest on record across the data examined,” Ms Steinbeck said.
“UDIA is very pleased to provide solid evidence that backs up our expectations for the property market moving forward,” Ms Steinbeck said.
“The positive signs and timing of a recovery is good news for the property industry, which has such a significant impact on the health of the broader WA economy,” Ms Steinbeck said.
“That is why it is so important for government policy at all levels to support the property market, given the benefit to our state as a whole,” Ms Steinbeck said.
“While we are confident about an uplift in the market, we are cognisant that the impact of the introduction of a Foreign Buyers Surcharge in WA this month remains to be seen,” Ms Steinbeck said.
“At a national level, outcomes of the banking royal commission and any potential changes to negative gearing and capital gains tax regimes following the federal election in May could also have an impact on the recovery, “Ms Steinbeck said.