14/10/2010 - 00:00

Bearish outlook for WA housing: HIA

14/10/2010 - 00:00

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THE Housing Industry Association has revised its forecast for WA’s residential construction sector, with its latest statistics showing new home construction will be down by 15 per cent this financial year.

Bearish outlook for WA housing: HIA

THE Housing Industry Association has revised its forecast for Western Australia’s residential construction sector, with its latest statistics showing new home construction will be down by 15 per cent this financial year, after an initial decrease of 5 per cent on financial year 2009-10 was expected.

The HIA’s latest Western Australian State Outlook has forecast 21,552 new dwelling starts in financial year 2010-11, slightly down from the 22,172 forecast in the last report, released in June.

Housing starts increased 37 per cent to 25,431 on the previous financial year in 2009-10, driven by federal government stimulus spending, while the HIA has forecast starts to reach 20,553 in 2011-12, compared to a forecast last outlook of 20,040.

The HIA has projected underlying demand for housing to be 27,500 dwellings in 2010 and 27,700 dwellings in 2011.

According to the report, a range of new housing indicators, from lending, building approvals, new home sales and home buying confidence point increasingly to a “renewed weakness” in residential construction.

Other contributing factors to the bearish viewpoint for WA’s residential construction sector were ongoing credit constraints, speculation regarding interest rate hikes and slow progress in the reduction of housing supply constraints, including attempts to streamline the approvals process.

“The net result is a less than favourable short-term view of new home building,” HIA chief economist Harley Dale said in the report.

The exit of first homebuyers from the market resulted in a significant drop in building approvals, which fell away sharply in the four consecutive months ending June 2010.

Total seasonally adjusted building approvals declined by 24.6 per cent in the July 2010 quarter although the approvals in this quarter are still 1.7 per cent greater than the corresponding quarter a year earlier.

In positive news for the sector, the HIA found the residential investment market was trending up in terms of lending for the construction of new dwellings and lending for investment in existing dwellings.

“Lending for the construction of residential properties for rent has continued the strong growth we observed in the last quarter, increasing by 14.4 per cent over the quarter ending June 2010,” Mr Dale said.

“After bottoming out at $311 million in December 2009, the total amount lent for construction of dwellings for rent or resale improved to $460 million as of July 2010.

“For existing dwellings, lending for investment increased by 3.9 per cent in the quarter ending June 2010 giving a year-on-year improvement of 2.5 per cent.”

 

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