Western Australian property experts have rubbished this week’s forecast by economists BIS Shrapnel that Perth house prices will increase 19 per cent over three years.
Report author Angie Zigomanis said despite recent declines, strong income growth related to the state’s mining boom and continued high population growth would improve housing affordability while tightening availability.
However, at least three other property experts criticised the report as being exaggerated and too optimistic.
Real Estate Institute of WA president Alan Bourke said the 19 per cent prediction was “way too high” and based on incorrect interpretations of population data.
“They’re underpinning [their prediction] with net migration into WA, whereas … we’re seeing 20,000-25,000 less [people] coming to the west than there was a couple of years ago,” he said.
Australian Bureau of Statistics data released last week showed there was a net gain of 47,400 people into WA last year. That compares to about 72,000 in 2008-09.
Mr Bourke said BIS Shrapnel had been incorrect in the past.
You can read more details of the latest BIS Shrapnel forecasts by clicking here.
“They had exactly the same prediction two years ago … and we saw really no movement at all in the past two years,” he said.
“They certainly haven’t been accurate, far from it.”
Property Council WA executive director Joe Lenzo said he did not expect Perth house prices to rise within the next nine to 12 months and then only gradually.
“There’s sufficient evidence that prices will increase [but] I wouldn’t be putting 19-20 per cent on it,” he said.
“BIS Shrapnel has a habit of pushing the envelope on either the upside or downside, depending on what they’re talking about.”
Perth house prices are presently in a recession and have fallen four per cent in the past year, according to Australian Property Monitors.
Mr Lenzo and Australian Property Monitors senior economist Andrew Wilson both believe there is potential for the market to climb out of the stalemate from mid-next year but were cautious to predict bullish growth by 2014.
“Given the fact that the Perth property market has really been in decline for the last three to four years we predict an upside but our figures show that the Perth property market is still very flat and there’s no definitive signs of recovery or stabilisation,” Dr Wilson said.
“I think it would take all the boxes to be ticked for the recovery to strengthen over the next two to three years.”
RPdata research director Tim Lawless said while he did not expect any growth over the next six months, from next year the timing would be right for price increases of up to 9 per cent per year.
“In cyclical terms Perth is probably about ready to show some improvements,” he said.
“Once we start to see stablisation of interest rates and economic stability on a global scale I think that’s when we’ll start to see consumers coming back into spend mode.”
Mr Zigomanis said he was not surprised by the criticism.
“It’s easy to look at a market [that has been] weak for two to three years and wonder where the growth is going to come from, how it’s going to happen,” he said.
His forecast relies on unemployment falling below four per cent and two rate hikes – later this year and again in the first half of 2012.
Mr Zigomanis said a lack of new homes to meet the net migration demand in WA would help drive up prices.
He admitted there was some risk attached to his forecast, particularly around interest rates and warnings of dire global economics.
“I wouldn’t wager anything on [the forecast],” he said.
“We’ve provided our outlook and why we’re saying it – we’ve [provided] all the factors behind it and the environment we expect it to take place in. If that environment changes that means the outlook can change as well.”