By Marissa Lague
The long reign of commercial property as the main driver of confidence in WN.s property market has come to an end. It has been replaced by the residential property sector as the main source of confidence according to the Property Council. The council’s latest survey with the ANZ Bank indicates the much anticipated recovery in housing construction is likely to last for the next year. Property Council executive director Joe Lenzo said all indications pointed to residential being the most influential sector for the next six to 12 months. “We’ve been waiting for the residential sector to improve for a while,” Mr Lenzo said. “We’ve had all the right economic indicators – interest rates are down, demand was increasing because of population growth and it was only a matter of time before residential picked up again and certainly that has now happened.” The Property Council-ANZ Property Industry Confidence Survey found expectations for strong growth in capital values for residential property, including retirement living property were ‘offset by lower expectations for commercial office capital values. All sectors of the WA property industry expected more construction activity and the survey also recorded solid growth in expectations for industrial and hotel property capital growth. Mr Lenzo said Perth apartment sales, especially in the $400,000 to $450,000 price range, were also a factor in the better residential sector outlook. WA recorded an overall property confidence index of 134 in the December quarter, down from 139 in the previous quarter. It lost its status as the market with the strongest property sentiment, with Sydney and Brisbane now holding the two top sports. “It’s a big turnaround and it’s been fuelled’ by residential demand. The level of activity in the commercial office space has dropped considerably,” Mr Lenzo said. “Quite a number of smaller comanies are sizing down or getting out all together, which has put more rental, subleasing offices on to the market. Also demand is very, very patchy. “There is also going to be some new product coming onto the market in the CBD and a few suburbs, so it doesn’t look like there will be any rental increases and, at the same time, there’s going to be minimal capital growth.” Jones Lang LaSalle’s third quarter research shows there has been a sharp increase in Perth’s CBD vacancy rate – at 9.4 per cent, compared with 2 per cent at the start of 2012.