Perth house prices set for biggest climb

The median price for a Perth house will pass $600,000 within three years as the city’s property market reclaims its title as the strongest and fastest growing in the country, a new report predicts.

The BIS Shrapnel residential property report forecasts house prices in Perth will climb an average 7 per cent a year for three years, pushing the median price to $610,000 from $500,000 today.

No other capital is expected to enjoy such strong capital growth, with even higher interest rates unlikely to slow the Perth market as much as others.

Senior project manager Angie Zigomanis said even though the Perth market slowed before other cities in 2007, conditions were improving on the back of another resources boom. Money flowing from commodities would soon push up house prices across Perth.

“With prices below peak levels in real terms and income in Perth set to grow substantially as the next round of resource expansion projects get up and running, solid price growth should continue,” he said.

“Nevertheless, further increases in interest rates will prevent the boom in prices that we saw in the last upturn.”

Mr Zigomanis said the median house price would climb 22 per cent by the middle of 2013. This growth would be quicker if the Reserve Bank did not increase interest rates in the next six to 12 months.

Growth at that rate would surpass other capitals such as Sydney (up 20 per cent), Melbourne (11 per cent), Brisbane (12 per cent), Adelaide (20 per cent), Hobart (12 per cent), Canberra (14 per cent) and Darwin (12 per cent).

House prices climbed rapidly through the second half of last year and into the first four months of this year.

Mr Zigomanis said this was directly because of record low interest rates in response to the global financial crisis and a “pull forward” of demand from the first-homeowner’s grant. Not only would house prices outpace inflation, they would affect rents.

“Even though overseas migration inflows are steadily easing, a deficiency of stock is still in place with dwelling construction below underlying trend,” he said.

Recent Australian Bureau of Statistics figures show a fall in loans for people buying homes but an increase in loans for investment properties. Financial market analysts do not expect official interest rates to rise until May next year.

source  :  www.thewest.com.au

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New boom, bigger problems: poll

One in two West Australians believes there will be greater skills shortages and more pressure on house prices compared with the last mining boom, the latest Westpoll has found.

The results revealed 53 per cent of those surveyed thought there would be more pressure on a housing price bubble and skills shortages than last time, while 32 per cent believed there would be the same level of pressure.

Just 9 per cent of those polled said there would be less pressure.

“There is a clear community expectation that there will be quite severe skills shortages in WA and, perhaps of greater concern, a view that there will be an upward pressure on housing prices,” pollster Keith Patterson said.

“This may lead to significant levels of speculation in housing in the anticipation that values will surge as the resources boom unfolds.”

Australian Manufacturing Workers Union secretary Steve McCartney said the community was right to be concerned about increasing prices.

“I think lower paid members of our community should be concerned because sometimes the benefits of those booms don’t filter down to the low-paid workers,” he said.

Construction, Forestry, Mining and Energy Union spokesman Gary Wood said he did not believe there would be more pressure as the WA economy improved.

“There might be the perception put out by the likes of the employer associations so they can attempt to justify the use of overseas labour but it needs to be fully demonstrated they are not just a propaganda war to bring in overseas labour,” he said.

Opposition Leader Eric Ripper said the Government needed to demonstrate a sense of urgency over labour supply, training issues and housing.

“The experience of the last boom was that house prices rose and rents rose and there were skills shortages which made life difficult for small to medium enterprises,” he said.

“The Government is not ensuring that enough housing lots are released.

“The industry is not building enough houses.

“We are storing up a problem for the future.”

Premier Colin Barnett had previously said there was a need to attract more skilled workers to WA and there needed to be more mobility of workers between States.

Deputy Prime Minister Julia Gillard said last month that interstate and international migration was needed to help fill future job vacancies. 

Source  :  www.thewest.com.au

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Migrant cuts would ‘hurt WA’

Business has warned that West Australians could be priced out of the resources boom and interest rates pushed even higher if the Federal Opposition follows through with a promise to slash the number of immigrants.

WA Chamber of Commerce and Industry chief economist John Nicolaou said the flagged cut would mean the abandonment of major developments by companies unable to find the workers they need to exploit the State’s natural resources.

He was backed by Trade Minister Simon Crean who said cutting immigration now would devastate economies like that of WA and Queensland which were crying out for workers.

The Opposition has signalled cutting the net immigration intake which, when temporary workers and students are taken into account, edged down to 297,000 in the three months to the end of September.

Shadow immigration minister Scott Morrison said forecasts of Australia’s population reaching 36 million by 2050 proved immigration under the Rudd Government was “out of control”.

He said a coalition government would bring immigration levels back to a “sustainable level”.

But Mr Nicolaou said with WA needing 400,000 people over the coming decade to deal with the resources boom, cutting immigration levels could prove economically disastrous to the State.

He said major resource companies would go overseas if they could not get the labour they needed in Australia.

Those that did continue work in WA would have to pay higher wages for their staff, which would then push up costs for the rest of the community.

“I think it’s very short-sighted if they’re looking at cutting immigration, because it’s going to push up costs for everyone through wages going up,” he said.

“We lost investment in the last boom because there were insufficient workers, and we run the risk of doing that again.”

Professor Peter Mc Donald of the Australian Demographic and Social Research Institute also warned that trying to cap immigration levels would have major economic ramifications for people already living in Australia. The Reserve Bank was already lifting interest rates to dampen demand.

“You’re just going to push up wages pressures and that will feed into higher interest rates,” he said.

Mr Crean said the resource States would be disadvantaged if the number of workers was artificially restricted.

“Mining companies generally are saying one of the biggest challenges they face … is the availability of skilled labour,” he said. “People calling for cuts to immigration programs ought to understand how the economy is functioning.” 

Source  :  www.thewest.com.au

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