14/09/2009 - 15:17

HIA revises down WA's housing market

14/09/2009 - 15:17

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The state's housing market is forecast to grow at a slower rate in 2009/10 than previously projected, as building approvals show slow signs of life, a new report shows.

The state's housing market is forecast to grow at a slower rate in 2009/10 than previously projected, as building approvals show slow signs of life, a new report shows.

Housing starts in WA for the 2009 financial year are expected to show a drop of 15 per cent to a level of 19,001, the Housing Industry Association said today in its quarterly state and national outlook.

HIA has forecast 6 per cent growth in housing starts for 2009/10, down from the previously projected 13 per cent.

Detached house starts are forecast to increase by 8 per cent to 16,220 units, following a drop of 11 per cent in 2008/09, while multi-unit starts are tipped to drop by 4 per cent to 3,890 after plummeting by 27 per cent the previous year.

However, housing starts are expected to gather momentum in 2010/11 with the figures to grow by 14 per cent to 23,011.

Nationally, HIA has forecast housing starts to drop 17 per cent in 2008/09 on the previous financial year but grow by a modest 7 per cent in 2009/10.

Following that, housing starts are forecast to increase by 17 per cent in 2010 to 153,790 and then by 15 per cent to 162,850 in 2010/11.

"The reasons for the recovery are well known -- low interest rates, first home incentives, and a massive boost for social housing. And with consumers feeling more confident about job security and the general economy, new home building and renovation activity will benefit," HIA chief economist Harley Dale said.

"There are early signs of trade-up buyers returning to the market. But to date, investors have tended to do more selling than buying.

"Since October 2008, when the first home grant was boosted, lending commitments to build new houses have increased by about 60 per cent.

"But local government permits to build new houses have increased by a much more modest 20 per cent, indicating there is a lot of new building work to come into the pipeline.

"The pick-up in residential building will be joined by an expansion of construction expenditure on mining projects, ports, water, transport, energy supply and communications, renewing pressures on the demand for skilled labour.

"The notice period is not that long, which makes the current review of Australia's immigration program very timely. With the construction industry in the United States and the United Kingdom still in the doldrums, additional efforts need to be made to attract skilled labour into Australia's construction industry.

"In addition, further initiatives are required to improve the retention of apprentices before the recovery in building takes hold."

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