GST not hitting homes

PREDICTIONS of a housing slowdown as the GST introduction looms closer are not reflected in enquiries received by WA’s largest home-building company, BGC Australia.

BGC has reported a 30 per cent increase in enquiries during the past month from people interested in building a new home for the first time.

They also predict housing demand will strengthen, not slow down, following the GST introduction on 1 July.

BGC Housing director Julian Ambrose attributes the strong interest to the effective (Government induced) $17,000 boost to the average first homebuyer.

“The decision by the State Government to formally launch the $7,000 GST rebate on 11 March and Keystart’s decision to increase the borrowing limit by $10,000 is very positive news for first homebuyers,” Mr Ambrose said.

Mr Ambrose said, during the past month, all housing divisions of BGC Australia had recorded a major increase in buyer interest.

“In particular, very strong levels of enquiries were recorded with the Western Australian Housing Centre and Housing Innovations,” Mr Ambrose said.

“The challenge for the new home building industry in WA is to turn these high level of enquiries into positive commitments.”

Yet the bullish outlook by BGC was not reflected in a recent survey of consumer sentiment.

House-buying sentiment fell for the fourth consecutive quarter in December although it still remains at historically high levels.

The Challenge Bank Index of House-Buying Sentiment fell 3.6 per cent in the March quarter, taking it 7 per cent lower than the level a year earlier.

While sentiment is dropping, so is housing affordability.

The Challenge Bank Index of WA Housing Affordability for established houses dropped significantly at the end of 1999, falling by 6.7 per cent to be down by nearly 10 per cent in annual terms.

The housing affordability index for new houses fell by 7.7 per cent during the March quarter.

“The tightening interest rate cycle, together with the fact that time has pretty much run out to get dwellings approved and completed ahead of the GST, form the basis for our case that March will more likely represent the peak of the housing sector,” the report says.

“However, the prospect of further very modest growth in June certainly cannot be ruled out.”

Established house prices posted a strong gain in December, rising 3 per cent to be up by more than 6 per cent for the year.

New house prices performed even more strongly, rising 4.2 per cent to be 9.8 per cent higher than the same period a year earlier.

The GST does not concern Mr Ambrose.

“Overall, BGC predicts a strong increase in first home building activity in the second half of 2000 following a slump in activity during the first half of this year,” he said.


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