The latest analysis of the Western Australian property market cycle over the past 30 years shows that the Western Australian property market may recover in the next 12 to 18 months.
UDIA analysis shows that the Western Australian real estate market has an average of five years as a cycle, rising from the “low valley and then back to the bottom.” Image source: Getty Images
The study, based on the Australian Bureau of Urban Development’s analysis of Australian Bureau of Statistics data over the past 30 years, predicts that Western Australian real estate will see an upward trend.
Tanya Steinbeck, CEO of UDIA WA, said that the Australian Urban Development Institute surveyed the housing market cycle in Western Australia over the past 30 years and found that the average period length was five years from “one valley to the next low”.
Ms. Steinbeck told us that UDIA analysis shows that the property market cycle in Western Australia is between 4.5 and 8.75 years, and the average life cycle in the past 30 years is five years.
Perth’s house prices have fallen by 15.6% since mid-2014.
“Although the current recession is more durable than many expected, it is still within the average timeframe of the historical market cycle,” she added.
“The current economic downturn is too long, in part because the last peak in 2014 was the highest peak data currently recorded.”
The study also shows the close relationship between mining exploration expenditures and the number of residential starts since 2007.
UDIA analyzed the Australian Bureau of Statistics data on residential start-ups, building approvals and housing finance in Western Australia over the past 30 years to estimate the relationship between the current market downturn and previous market cycles.
Steinbeck said: “We have found a two-year lag between the increase in mining exploration spending in Western Australia and the increase in residential starts, so UDIA estimates that the next market will rise in the next 12 to 18 years based on current mining exploration expenditures. It happens within the month.”
Based on a more in-depth market cycle study, we also forecast that the next residential start-up period in Western Australia will probably be from mid-2020 to 2022.
Ms. Steinbeck said: “The positive signs and timing of economic recovery are undoubtedly good news for the real estate industry, which has had a major impact on the health of the entire Western Australian economy.”
According to Ms. Steinbeck’s analysis, there are several factors that will affect the Western Australian property market.
She said that despite the confidence of the Australian Urban Development Institute in the recovery of the market, the report of the Royal Bank of China and the reform of the negative tax deduction and capital gains tax after the federal election in May may have an impact on the economic recovery.
In addition, the impact of foreign buyer surcharges introduced in Western Australia on January 1 has yet to be seen.
Last year, the Western Australian government announced that foreign investors must pay a 7% surcharge to purchase property in Western Australia. Western Australian Finance and Finance Minister Ben Wyatt said the proceeds from the surcharge will be used to freeze the TAFE fee plan and subsidize the budget.