THE escalation in land prices, reduced availability of indemnity insurance, and regulatory delays at State and local government levels are the major factors behind increasing costs of new homes, according to the Master Builders Association of Western Australia.
In its submission to the Productivity Commission first home ownership inquiry, the peak industry group said the decline in first home ownership was not linked to excessive increases in new home building costs.
According to Australian Bureau of Statistics figures, the cost of building a new home in WA is still among the lowest in the nation.
The average cost per square metre of a new house in the Perth metropolitan region is around $100 cheaper than in cities on the east coast.
The MBA has suggested the First Home Owners grant be fine-tuned to provide a more equitable and efficient means of assisting first-time buyers.
The group has suggested: restricting the grant to the new home market only to counteract the impact of GST; varying the size of the grant to reflect the higher cost of building in regional areas; and allowing flexibility, such as using the grant as a monthly subsidy on housing repayments.
Over the long term, the MBA has urged that governments implement training and immigration policies that address the challenge an ageing workforce in all the major building trades presents to the industry, and provide a solution to the home indemnity insurance issue.