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Supply and demand start to even out 04/06/2016

UDIA’s latest Urban Intelligence Report provides a snapshot of key trends impacting on the property market from month to month.

UDIA’s latest Urban Intelligence Report provides a snapshot of key trends impacting on the property market from month to month.

While the figures show WA’s economic growth is easing, there are positive signs the current market could provide great opportunities for potential buyers, particularly following the latest cut to the official cash rate.

Our report shows unemployment has slightly decreased to 5.9 and WA’s population growth has remained steady.

In terms of the residential property market in particular, the statistics show an improvement over the last month with dwelling finance figures for first homebuyers up by 15 per cent in February 2016 and up 16.9 per cent for non-first homebuyers.

Encouragingly, the land market recorded a 39.5 per cent increase in lot sales between March and April which is also a 4.4 per cent improvement on the same time last year.

The affordable end of the market is where much of the activity is occurring with 67 per cent of lots sales in April priced under $240,000. This just goes to show that there are certainly some affordable opportunities out there for those on the lookout.

Another report that has been released recently that provides a snapshot of current market conditions is the Housing Industry Forecasting Group’s (HIFG) Forecast Dwelling Commencements in WA Update for April 2016.

The HIFG has downgraded its commencement forecasts for the 2016-17 financial year to 19,000, which is down from the 20,000 forecast in their last report back in October 2015.

According to the HIFG, the change in forecast commencement figures can be attributed to declining figures across a number of indicators including population growth.

I think it is important to note however, that while the September 2015 population growth figures were 15 per cent lower than the same period in 2014, this still equates to an increase of 32,542 people for the period, which is still a significant number of people who will potentially require housing.

What the figures really show is that housing supply is starting to catch up with demand, which is positive news for the property market in WA.

In previous years when the mining boom was driving up demand for new housing, we had a supply shortage which saw developers striving to meet that market demand. We are hopefully now heading for a period where supply and demand is more in balance which is likely to have a positive effect on housing prices moving forward.

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