Building activity in Western Australia continues to build momentum according to the latest Australian Bureau of Statistics figures, which show the total value of building work in WA grew for the 10th consecutive quarter in March 2006.
A total of $1.84 billion worth of building work commenced in the quarter, while $1.27 billion worth of work was completed during the same period.
New housing starts in WA eased in the March quarter, with 5,220 starts compared with 5,324 in the December quarter, but figures were still well up from March 2005 quarter figures of 4,324.
While the figures appear healthy for now, industry researcher and forecaster BIS Shrapnel has just released a study titled ‘Building in Australia 2006 to 2021’, which forecasts a decline in building starts in WA due an expected 0.5 per cent rise in interest rates within the next 12 months.
BIS Shrapnel senior project manager Jason Anderson said in a statement the firm expected the downturn of housing starts that have affected New South Wales, Victoria and Queensland, to spread to South Australia and WA in 2006-2007 and 2007-08, as property markets begin to cool.
Housing Industry Association director of government and media Sheryl Chaffer agreed the market was starting to drop a little, despite housing starts continuing to rise from March through May.
“We do expect a slight fading back, possibly for 2007-08, but we still have high demand for housing buoyed by strong employment and a booming resource sector,” Ms Chaffer told WA Business News.
The association believes the shortage of available land for development was affecting housing affordability, and only an increase in lots would ease some of the high prices currently being paid for land.
BIS Shrapnel expects price growth to also slow in 2006-07, rising only 3 per cent as the WA economy moderates.
This pales in comparison to the 20 per cent growth in median prices in 2005-06 and 16 per cent growth in 2004-05.
Since 2001, Perth’s median house price has risen a total of 113 per cent and it is now believed to be sitting at just over $400,000, overtaking Melbourne as the second most expensive city, behind Sydney, in which to buy a house.
