Dwelling starts to hit 25-year high

Western Australia’s residential construction sector is continuing to exhibit rapid growth, with the state government’s official forecaster tipping the highest level of activity in more than two decades.

The Housing Industry Forecasting Group’s latest report has predicted new home builds will hit 27,000 in the current financial year, before contracting slightly in 2014-15 to 25,000.

The last time dwelling starts in WA were around the 27,000 mark was in 1988-89, the HIFG said.

Building starts in the first half of 2013-14 came in at 14,185, up 18 per cent on 2012-13.

On the land side of the ledger, the report showed a need for 21,000 vacant lots in the current financial year.

However demand for lots was tipped to fall to 17,000 in 2014-15.

Interim March quarter figures from the Urban Development Institute of Australia showed there were 2,635 lots sold over the period, with a total value of $692.3 million.

The average price of lots sold in the quarter was just more than $262,000, with the average size coming in at 420 square metres.

HIFG chair Stewart Darby said activity was being driven primarily by low interest rates and the state’s strong population growth.

He said developers were pre-selling future supply to meet demand.

“The need for greater acknowledgement in the community that the traditional model of having serviced and titled lots readily available to meet immediate inquiry and demand has shifted over time to a more ‘just in time model’, where pre-selling has become a feature of today’s market,” Mr Darby said.

“This is particularly the case where there is a strong upturn in demand.”

He said the upturn in new home building activity was starting to flow through the housing system, with rental vacancy rates on the rise and Perth rents falling.