It is interesting reading regarding WA market.
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http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=94361
The WA property market will bottom out by the end of the year and then crawl back up over four years to another peak, according to the Property Council of Australia, which warns that urgent government action is needed if the State is to avoid another boom-bust cycle.
The State Government must release more land for commercial, industrial and residential use, the leading property body said.
It would also need to fast-track the development approval process, which was too time consuming and resulted in long delays to projects, stifling progress, the PCA said.
Research by the PCA’s WA division shows since the mid-1980s there have been three full cycles in the WA real estate sector, including peaks in 1988, 1994, 2000 and 2006.
PCA WA division policy manager Lino Iacomella said the cycles in WA had been very consistent, lasting an average of six years.
The average time between a market peak and the subsequent low point was two years and the average recovery phase was four years.
“If these consistent historical patterns were repeated, we should expect the bottom of the current cycle to occur in the second half of 2008, which should be followed by a recovery period of some four years leading up to the next market peak,” he said.
The PCA analysed Landgate data, which cover all property dealings in the State, including residential, commercial and rural.
The research showed that since the market peaked in the year to June 2006 with about 122,000 property settlements, the number of settlements has dropped to 88,000 in the year to June 2008. This represents a decline of almost 30 per cent in real estate transactions.
Further analysis of the Landgate data shows that the populationadjusted number of settlements has fallen to a point that is comparable to the preceding low points in 1991, 1996 and 2001.
“In other words, we are at or very close to the bottom of the market and historically we track along the bottom for a quarter or two before sales numbers climb again,” Mr Iacomella said.
“Interestingly, this is associated with reductions in interest rates.”
The findings have some important policy implications for governments.
“It is clear that in addition to economic factors like interest rate movements, government action or inaction can have an important impact on the cycle,” Mr Iacomella said.
“For example, the mini-cycle between 2000 and 2002 coincided with the introduction of the GST and the subsequent First Home Owners Scheme that kick-started a languishing market.
“Similarly, the long run up to the huge boom market of 2005-06 was accentuated by the shortage of land for residential and non-residential purposes, that is, commercial and industrial.”
The shortage was precipitated by low levels of land production in the late 1990s when population growth was lower and the resources sector was subdued.
If WA was to avoid a repeat of sharp boom-bust cycles, early action was required, including the creation of enough zoned land for residential and non-residential property uses.
“It is a timely reminder for the Government not to relax in regard to zoning,” Mr Iacomella said.
“It also needs to fast-track improvements to the development approval process.
“The long delays in getting developments approved, through local government particularly, were a key part of the problem in 2006 when the market was booming.
“It took too much time to get land on to the market.”
Local government had an important role to play in processing development applications for new residential land subdivisions, he said.
If action was not taken by governments, it would be too late to avoid the harmful effects of excessive price rises in property by speculators at the peak of the market.
CATHY SAUNDERS
"
"
http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=94361
The WA property market will bottom out by the end of the year and then crawl back up over four years to another peak, according to the Property Council of Australia, which warns that urgent government action is needed if the State is to avoid another boom-bust cycle.
The State Government must release more land for commercial, industrial and residential use, the leading property body said.
It would also need to fast-track the development approval process, which was too time consuming and resulted in long delays to projects, stifling progress, the PCA said.
Research by the PCA’s WA division shows since the mid-1980s there have been three full cycles in the WA real estate sector, including peaks in 1988, 1994, 2000 and 2006.
PCA WA division policy manager Lino Iacomella said the cycles in WA had been very consistent, lasting an average of six years.
The average time between a market peak and the subsequent low point was two years and the average recovery phase was four years.
“If these consistent historical patterns were repeated, we should expect the bottom of the current cycle to occur in the second half of 2008, which should be followed by a recovery period of some four years leading up to the next market peak,” he said.
The PCA analysed Landgate data, which cover all property dealings in the State, including residential, commercial and rural.
The research showed that since the market peaked in the year to June 2006 with about 122,000 property settlements, the number of settlements has dropped to 88,000 in the year to June 2008. This represents a decline of almost 30 per cent in real estate transactions.
Further analysis of the Landgate data shows that the populationadjusted number of settlements has fallen to a point that is comparable to the preceding low points in 1991, 1996 and 2001.
“In other words, we are at or very close to the bottom of the market and historically we track along the bottom for a quarter or two before sales numbers climb again,” Mr Iacomella said.
“Interestingly, this is associated with reductions in interest rates.”
The findings have some important policy implications for governments.
“It is clear that in addition to economic factors like interest rate movements, government action or inaction can have an important impact on the cycle,” Mr Iacomella said.
“For example, the mini-cycle between 2000 and 2002 coincided with the introduction of the GST and the subsequent First Home Owners Scheme that kick-started a languishing market.
“Similarly, the long run up to the huge boom market of 2005-06 was accentuated by the shortage of land for residential and non-residential purposes, that is, commercial and industrial.”
The shortage was precipitated by low levels of land production in the late 1990s when population growth was lower and the resources sector was subdued.
If WA was to avoid a repeat of sharp boom-bust cycles, early action was required, including the creation of enough zoned land for residential and non-residential property uses.
“It is a timely reminder for the Government not to relax in regard to zoning,” Mr Iacomella said.
“It also needs to fast-track improvements to the development approval process.
“The long delays in getting developments approved, through local government particularly, were a key part of the problem in 2006 when the market was booming.
“It took too much time to get land on to the market.”
Local government had an important role to play in processing development applications for new residential land subdivisions, he said.
If action was not taken by governments, it would be too late to avoid the harmful effects of excessive price rises in property by speculators at the peak of the market.
CATHY SAUNDERS
"
