IMPROVEMENTS in the mining industry indicate a property market upswing in 12-18 months according to the Urban Development Institute (UDIA WA).
UDIA WA tracked the impact of mining exploration expenditure on dwelling commencement figures and found a clear link, particularly since 2007.
“There has been a distinct two-year lag between an uplift in mineral exploration expenditure and a corresponding uplift in dwelling commencement figures in WA,” chief executive Tanya Steinbeck said.
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READ NOW“Therefore, based on the current mineral exploration expenditure figures, UDIA estimates the next market uplift will occur in the next 12 to 18 months.
“Based on our broader market cycles research, we can also expect that the next peak in dwelling commencements across the state to occur between mid-2020 and 2022.”
UDIA WA also researched WA property market cycles over the last thirty years and found the average length of a property market cycle in that period was five years from ‘trough to trough’.
“Property market cycles in WA have spanned between 4.5 to 8.75 years, with an average of five years over the last thirty years,” Ms Steinbeck said.
“While the current downturn has extended for a longer period of time than many might have expected, it sits 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.”
Ms Steinbeck said UDIA WA was very pleased to provide solid evidence that backed up its expectations for the property market.
“The positive signs and timing of a recovery is good news for the property industry, which has such a significant impact on the health of the broader WA economy,” she said.
“While we are confident about an uplift in the market, we are cognisant that the impact of the introduction of a Foreign Buyers Surcharge in WA this month remains to be seen.
“At a national level, outcomes of the banking royal commission and any potential changes to negative gearing and capital gains tax regimes following the Federal election in May could also have an impact on the recovery.”