Oversupply risk for Perth houses, not apartments, says real estate expert
PERTH is at a greater risk of an oversupply of houses than it is apartments, according to a national property forecaster.
PERTH is at a greater risk of an oversupply of houses than it is apartments, according to a national property forecaster.
BIS Shrapnel managing director Robert Mellor said single-dwelling construction needed to be reduced by at least 40 per cent in the next three years to maintain a balance in the market.
He said despite concerns of a looming apartment oversupply, Perth is more likely to be oversupplied with new-build houses after 30,000 were finished last year, the highest number on record.
“Population growth has, to say the least, nosedived,” Mr Mellor said.
“Net overseas migration has gone from about 50,000 three years ago and it’s heading down to about 10,000 this financial year.
“The amount of housing that is built needs to decline rapidly, otherwise the market will go into an oversupply. I don’t think there’s an oversupply at the moment, but we’ve gone from very tight conditions to soft market conditions.”
But Master Builders Australia’s director of housing, Geoff Cooper, denied Perth was at risk of oversupply, claiming developers were well aware of their need to cater to demand.
“Here (in WA) we’re very careful not to speculate and build only when we have sales commitments ... in the apartment market particularly developers can only get financing once they’ve had a high level of sales,” Mr Cooper said.
He expected Perth to come off the construction levels of 2014 and return closer to the decade average.
“This is good news for consumers as it will mean quicker construction,” he said.
Mr Mellor, who is in Perth this week to present his views on the WA economy at the BIS Shrapnel Business Forecasting Conference, also predicted median house prices would decline another 1.5 per cent in the next year, and construction would decline for the next three years.
“WA could be looking at building only 19,000 new homes per annum,” he said.
He said while houses were more likely to be in oversupply, apartment construction still needed to fall back about 20 per cent this financial year.
“Apartments only have about 25 per cent of the market in Perth,” he said.
“In NSW they are above 50 per cent of the market.
“Having said that, we still expect construction to fall about 20 per cent ... the issue Perth faces is that much of the construction was planned in boom times.”
Property valuer Gavin Hegney agreed that Perth’s housing construction needed to fall “up to 50 per cent” in the next two years, but said people should “feel more comfortable” buying now than they did during boom times.
“The positive to take away is that we’re not in an overheated market like Sydney,” Mr Hegney said.
Originally published as Oversupply risk for Perth houses, not apartments, says real estate expert