As the New Year approaches, property pundits are hedging their bets on where the market will head in 2007 while reflecting on a year during which the price of an established house rose by 46 per cent in just nine months.
As the New Year approaches, property pundits are hedging their bets on where the market will head in 2007 while reflecting on a year during which the price of an established house rose by 46 per cent in just nine months.
Last week, property developer Nigel Satterley bravely declared the property boom was over, and predicted the market was cooling fast.
Addressing a WA Business News Success & Leadership breakfast, Mr Satterley told the crowd he expected to see little price growth over the next six to nine months.
“The eastern states investors have departed the market; residential investor activity is down from a high of 25 per cent of the market five months ago to 12 per cent,” he said.
Mr Satterley predicted commodity prices would soften in the second half of next year, slowing the property market even further.
“The $1 million properties won’t grow at 30 per cent but they will drop to more sustainable levels of seven to 10 per cent. The growth of properties at the lower end has certainly topped out,” he said.
Commenting on the increasing market segmentation, REIWA president Rob Druitt said the resources boom was driving strong sales at the higher end of the market but he forecast lower price growth in this segment next year.
Price growth in all sectors is moderating,” he said.
“I don’t think we’ll see the 30 per cent price spike that occurred in 2006 again, but an upward trend for the rest of this decade is possible,” Mr Druitt told WA Business News.
“There’s more certainty in the market and average selling times are stretching out to between four and six weeks, which is healthy.”
Housing Industry Association (WA) executive director John Dastlik said there would likely be a 14 per cent drop in dwelling starts to 21,000 in the 2007 calendar year, from 25,000 starts in 2006.
“It’s still a good level of activity when you consider the 1990s average was 18,000 housing starts,” he said.
Mr Dastlik said demand was certainly cooling and this was, in part, driven by a lack of available land and cost pressures.
“All the government can finalise is another 24,000 conditionally approved lots next year; that’s a substantially good effort,” he said.
Master Builders Association of WA executive director Michael McLean confirmed that housing starts had peaked but the industry would still struggle next year to cope with demand.
“Traditionally, we’ve been very resilient in meeting the challenges, so I think we’ll see more subdivisions, smaller homes, brick veneer, and more kit homes in the regions,” Mr McLean said.
He believes the fork in road will come when the state government releases its budget next year, while under pressure to deliver stamp duty relief.
