AUSTRALIA’S largest residential building organisation, the Housing Industry Association, says there will be fewer housing starts in Western Australia than originally forecast, due to the struggling established home market and a continuing lack of consumer
AUSTRALIA’S largest residential building organisation, the Housing Industry Association, says there will be fewer housing starts in Western Australia than originally forecast, due to the struggling established home market and a continuing lack of consumer confidence.
Revised HIA statistics have shown an expected sharp fall in WA housing starts in 2010-2011 to 19,860, a 21 per cent decline from 2009-2010.
Previous statistics released in March by HIA painted a more optimistic picture, with 2010-2011 housing starts forecast at 21,090 and 2011-2012 starts 20,470.
HIA executive director for WA John Dastlik said the current state of the established home market was directly responsible for the declining number of housing starts.
“The established market is very lacklustre and if you take out investors and first home buyers, about 70 per cent of the new home building market consists of people from the established market who decide to build,” he said.
“But while that remains in the doldrums, I think you’ll find the new home market will also be suffering as a consequence and that is driven by a lack of consumer confidence.”
Lengthy approval processes and unnecessary ‘red tape’ relating to the construction of new homes were other factors contributing to the figures, according to John Dastlik.
“There are lots of regulatory imposts that continue to impact on the time taken to get building approvals, because some local authorities have local government requirements relating to planning approvals and those delays add cost to the process,” Mr Dastlik said.
With dwelling commencements set to decline to below 20,000 in 2010-2011, the HIA predicted an annual dwelling shortfall of more than 7,000. However, a rebound of 17.8 per cent over 2012 and 2013 combined was predicted, with starts tipped to reach 22,740 in 2013.
Satterley Property Group principal Nigel Satterley was more pessimistic. He said that, on average, only 16,500 dwellings would be completed each year for the next 10 years.
“We believe there will be no more than 2,500 multi-residential dwellings and 14,000 single family homes,” Mr Satterly said.
“16,500 will be the maximum figure because a lot of people can’t get finance approval and consequently can’t sell their house or they change their minds and decide to renovate.”
However, Mr Dastlik argued that such predictions could be subject to certain influencing factors.
“So many things can impact on that [figure], particularly in terms of government policy as we saw when the stimulus package came into play ... all of a sudden thousands of first home buyers were able to access additional funding to get them into a home,” Mr Dastlik said.
The Housing Industry Forecasting Group also predicted a dramatic fall in dwelling starts in WA, to 20,000 this financial year compared to 25,000 dwelling starts in the previous year.
Both HIFG and HIA said the latest outlook suggested new housing starts would fall short of the necessary 25,000 homes to meet annual underlying demographic demand.
Mr Satterley was skeptical such building targets could be reached.
“That will never happen because of the lack of affordability,” he said.
