The Western Australian (WA) housing market is expected to bounce back in the next 12 to 18 months, according to Urban Development Institute of Australia’s (UDIA) analysis, which was based on three decades of Australian Bureau of Statistics data.
UDIA WA Chief Executive Tanya Steinbeck said the institute monitored property market cycles in WA over the past 30 years and found that cycles in the state have spanned between 4.5 and 8.75 years, with an average length of five years during the period.
Realestate.com.au also reported that as part of the research, UDIA found an evident relationship between mining exploration expenditure and dwelling commencement figures, specifically since 2007.
UDIA examined ABS’ data on WA dwelling commencements, building approvals and dwelling finance commitments over the past three decades to compare the current market downturn with previous market cycles.
According to Steinbeck, there has been a notable two-year gap between a rise in mineral exploration expenditure and a corresponding uplift in dwelling commencement figures in WA.
Basing on the current mineral exploration expenditure figures, UDIA estimated that the next market uplift will happen in the next 12 to 18 months.
Steinbeck also said that the next peak in dwelling commencements across the state is forecasted to occur between mid-2020 and 2022.
While the current downturn has lasted for a longer period than anticipated, it is well within the average time range of historical market cycles.
“The length of the current downturn is, in part, due to the 2014 peak being the highest on record across the data examined,” said Steinbeck.
Steinbeck said that the positive signs and timing of a recovery are good news for the property industry, which has a major impact on the health of the broader WA economy.
Steinbeck warned, though, that there are several factors that may affect the recovery. These include the banking royal commission, and possible changes to negative gearing and capital gains tax following the May federal election. Adding to this list is the still-unseen impact of the introduction of a foreign buyers surcharge last year.