Figures released last week by the Housing Industry Association indicate the residential market in Western Australia will continue to face challenges in 2008.

The HIA WA’s outlook report, which contains data for the September quarter 2007, says that while the volume of construction being completed remains strong, there are indications of an easing in volume in the future.

Dwelling approvals rose by 2.7 per cent in the three months to December, driven by a 17 per cent surge in multi-unit approvals.

However, detached house approvals were down by 1 per cent.

Housing starts recovered during the same period, again boosted by the multi-unit sector, which was up 22.6 per cent.

While housing starts increased by 2.9 per cent overall, detached house starts were down 2 per cent.

This was consistent with a 12.9 per cent decline in detached house starts for the 12 months to the September quarter, which was higher than the overall decline of 10 per cent.

For the 2007-08 financial year, the HIA expects a decline in starts of 11 per cent, and no growth in the following year.

Housing starts are expected to improve by 2 per cent at the end of the decade, due to the state’s economic strength and strategies to improve housing affordability.

On the volume side, residential construction was 8 per cent higher in the 12 months to the end of November to reach $5.1 billion.

While 80 per cent of this work related to detached housing, the value of construction on multi-units soared by 30.1 per cent to $1.1 billion.

The HIA is predicting a flat result for the current financial year, with a 10 per cent fall over the following two years as the construction pipeline eases.

Renovation activity during the year reached a record level of $3.6 billion, up by 15.9 per cent on the previous year.

Further modest growth, of 4 per cent, is forecast for this year, before a plateau in house prices leads to some modest easing in the next two years.

Residential investment picked up in October and November last year, although the HIA believes a recovery is uncertain in 2008.

With investment in new rental stock unlikely in the short term, vacancy rates are expected to remain low for some time.

Northbridge precinct develops nicely