Mining continues to underpin WA property market

The Western Australia property market is set to improve in the second half of 2012, on the back of what has been a steadying market, but any recovery is expected to be gradual, according to the First National Real Estate 2012 Property Market Outlook Mid-Year Update. 

The Update, released this week, is based on a survey of the 400-plus member network, and provides an insight into what member agents expect the market to do, drawing on their experience at a grass roots level.

The optimism is a result of new projects translating into employment opportunities and a steadily improving property market. 

The mining and resources sector continues to underpin the state’s economy, which is attracting strong levels of population growth. 

Business confidence and the flow-through effects to employees will be an important influence on how the public perceives conditions and, ultimately, their behavior. 

The key challenges facing the state’s property market are vendors adjusting their price expectations to meet market demand, especially in Kalgoorlie and some parts of Perth, and banks and securing finance, particularly for Kalgoorlie residents. 

Consumer confidence, especially as a result of current and planned infrastructure projects, coupled with better buying conditions, will cause the state’s property market toe further stabilise and steadily improve over the coming six months. 

The Update says the strongest growth will come from first home buyers, followed by upgraders, then investors. 

Home buying activity will be driven by improving rental yields and returns for investors and increased affordability through low interest rates and falling property prices. 

Property prices should stabilise or steadily improve, with house prices on the rise and representing the strongest-performing sector. 

The rental market in Western Australia is expected to perform well in the coming six months, with vacancy rates trending downwards and weekly rents trending upwards. 

Interest rates are expected to reduce further, adding to improving affordability levels, stabilising prices, strengthening buyer confidence and stimulating activity in the slow property market. 

However, the slow market recovery to date is forcing the hand of many financial institutions, which are being forced in some areas of Perth especially to foreclose, and so mortgage defaults are increasing. 

The commercial property market in Western Australia is being driven by the strengthening mining industry, particularly in the Kalgoorlie region. 

This growing demand in the resources market will also positively affect the Perth office market, where tight vacancy rates will cause demand to begin to flow to the outer regions of the city. 

Increased job opportunities will significantly impact the state’s commercial property market, with the strongest growth expected to be in the industrial sector followed by the service industry. 

The rural property sector in the state will be driven by limited availability of stock in built-up areas, and a need for price adjustments where demand is low. 

According to the Update, lifestyle properties represent the greatest growth in the rural sector for the state, especially in areas like Swan Valley, which is always a popular spot.

Cambell Giles is Western Australian state chairman of First National Real Estate