Despite anecdotal reports that the Western Australian property market is on the verge of a recovery, the strength in the state’s resources sector is yet to translate into any rebound in the residential property market, according to a new report from CB Richard Ellis.
Earlier this week, RE/MAX WA managing director Geoff Baldwin said now was the time for investors to take action in WA.
“All indicators are pointing to the Western Australian property market beginning a steady recovery and for prices to rise steadily during the next 12 months and beyond,” Mr Baldwin said.
“When people see the market showing signs of improvement the temptation is to hold off and wait for more profits from your current home, however, this can be a big trap if you are considering upgrading.”
CBRE’s Q3 Residential MarketView report, released yesterday, highlighted that, while the longer-term growth prospects for WA are among the best in the nation, the property market is suffering from a segmented economy, where growth is patchy and confidence is limited to the mining industry.
“With buyer activity continuing to fall and reduced confidence in the market, there has been significant pressure on sales volumes,” said CBRE manager global research and consulting, Sam Reilly.
“Although Western Australia remains well placed to experience strong levels of economic growth over the longer term, largely due to the expanding mining industry, a number of key areas such as tourism, viticulture and construction are under downward pressure and this is impacting on the strength of the overall residential market.”
Wider economic issues such as difficult lending conditions, rising living costs, interest rate uncertainty and exchange rate pressures have also impacted the WA residential market as have employment risks inherent in particular industry sectors, according to CBRE.
“The South West region of the state including the Greater Bunbury Region, Shire of Busselton and Augusta-Margaret River have continued to experience relatively subdued market conditions given the current pressure on the construction, tourism and viticulture industries, which are key employers in this area,” CBRE director valuation and advisory services, Michael Veletta, said.
“There has been a lower than average volume of transactions across most residential market sectors although there have been some indications over the past few months of improving enquiry in the established lower end of the market, sub $400,000, given the perception from investors that prices are bottoming out after an extended period of falling value levels."