Boom shows no slowdown

THE new home building boom in WA, which began twelve months ago, shows no signs of slowing according to new data from the Australian Bureau of Statistics.

In turn, prices for housing in Perth are growing rapidly.

Other figures from the ABS show the index of house prices in Perth rose 3 per cent in the December quarter.

The news comes despite repeated predictions by some industry commentators who expected a slowdown as time ran out to ‘beat the GST’.

BIS Shrapnel says the ‘pull forward’ effect of the GST on new homebuyers is proving much stronger than previously expected.

Real Estate Institute of WA president Neville Fox described the past twelve months as a pressure cooker in a strangely quiet market which had culminated with the increase in prices.

WA approvals averaged more than 5,000 in the past two quarters, the highest level in more than five years.

The Master Builders Association is now expecting building activity to peak by the end of April.

“Builders are working to capacity and the industry’s resources are being stretched to the limit,” MBA director Michael McLean said.

“Unfortunately, the high building activity levels have resulted in serious shortages of bricklayers and other skilled tradespeople which has caused significant delays in construction,” he said.

While the GST has perhaps the strongest influence on consumer building demand, it is not the only driver.

“Other factors such as low interest rates, high employment levels, low unemployment rates and ready finance have all contributed to the healthy state of the housing industry,” Mr McLean said.

The figures are also reflected in robust credit growth.

Data from the Reserve Bank of Australia show that, while personal credit appears to be slowing, housing credit continues to move from strength to strength.

Housing credit grew by 1.4 per cent in January compared with a 1.2 per cent increase in December.

This was the strongest growth since mid-1995.

On the other hand, personal credit growth, while still climbing, dropped from 1.6 per cent in Dec-ember to 0.9 per cent in January.

Private business credit growth, however, has only increased 6.2 per cent for the year to 30 January, compared with total private sector credit growth which is up 11 per cent on the previous year.

Westpac economist Harley Dale said, while the results showed a modest slowing, they were still consistent with a very robust start to 2000.

“The key driver of the largely unchanged total credit profile was the continued strength in housing credit,” Mr Dale said.

The ABS has revealed new home building approvals in January rose sharply in most parts of Australia. WA recorded one of the largest increases.

There were 2,281 approvals for new homes in January, a monthly increase of 12.5 per cent and an annual increase of 36.3 per cent.

In response to the buoyant news, Mr Fox said, whereas the surge in approvals in other states was driven by home unit construction, in WA most of the activity was in new family homes.

“Today’s figures should not be interpreted as an overheating housing sector,” he said.

“We anticipate that new home building activity will return to more normal levels very quickly in the coming months.”