WA Budget indicates robust growth ahead

WA Budget indicates robust growth ahead

Posted on Thursday, May 31 2012 at 11:11 AM

In the 2012-13 Western Australian Government Budget paper handed down almost two weeks ago, a healthy 6.7 per cent growth in property prices has been estimated for the coming financial year, with sustained increases ahead.

The WA Budget
paper’s economic forecasts for 2012-13 reports the established house price index
to jump from -2.5 per cent annual growth in 2011-12 to a mighty 6.7 per cent
for 2012-13, higher than the consumer price index estimate of 3.5 per cent per
annum and the wage price index estimate of 4.5 per cent per annum.

The Budget
paper also indicates increasing transaction volumes toward a long-run trend.
The paper reports an estimated 17.6 per
cent growth for transfer duty in 2012-13.

Beyond 2012-13
transfer duty is estimated to be approximately 9.6 per cent per annum, though
the paper states these estimates are still lower than the duty raised in
2006-07 and 2007-08.

Rental growth
is looking good for WA landlords, with rental vacancy rates continuing to
tighten, decreasing to 2008 levels. The Budget reports Perth’s average weekly
rent has increased by eight per cent from last year to $400 per week this year.

More WA
landlords are likely to receive higher land valuations in 2013-14, a reflection
of the pick-up in the housing market in 2012-13; the Valuer General estimates
land tax to return to the long-term average of 10 per cent per annum.

When comparing
this 10 per cent increase in land tax growth to the 6.7 per cent increase for
the established house price index, what this means is a higher proportion of
investors compared to owner-occupiers will return to the market because
naturally only investors pay the land tax, said Gavin Hegney of Hegney Property Group.

When combining
all the Budget paper indicators including the strong labour market, the housing
picture it paints is a very bright one, said Hegney. “We’re clearly ahead of
the other states in the cycle. We have very strong business investment, a
strengthening labour market, a lowering unemployment rate and now we’re seeing
upper pressure on wages; all that flows through to house price growth.

“Stepping
back from the numbers though, people are gaining confidence again in Perth. It
looks like we’re in for some robust growth ahead,” Hegney said.

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