07/09/2020 - 13:00

HIFG lifts housing forecast

07/09/2020 - 13:00

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The Housing Industry Forecasting Group has estimated dwelling commencements in Western Australia to rise to 17,000 in 2020-21 on the back of government housing stimulus packages.

HIFG lifts housing forecast
HIFG is still uncertain over how long the stimulus-induced high levels of demand will last. Photo: Gabriel Oliveira.

The Housing Industry Forecasting Group has estimated dwelling commencements in Western Australia to rise to 17,000 in 2020-21 on the back of government housing stimulus packages.

The group said there was a high degree of market uncertainty when it updated its 2019-20 forecast in April, initially anticipating 12,500 dwelling commencements in WA for 2019-20 – a drop from 15,500 predicted in November.

The HIFG has since revised its forecast, lifting its previous 2019-20 estimate for dwelling commencements in WA to 14,500, while also releasing its predictions for 2020-21.

Stimulus packages had significantly increased activity in the new build market, the HIFG said, which it expected would feed through to dwelling commencements in 2020-21.

HIFG chair Steven Rowley said it remained to be seen how long this increased level of demand would last, given key demand drivers around employment, wages and population growth remained soft.

However, Professor Rowley said it would boost new dwelling commencements in the short term.

“The short-term nature of the grants and building conditions that need to be in place to receive them have led to considerable capacity constraints in an industry that has been operating at subdued levels for the past few years,” he said.

“If the industry cannot respond appropriately, the impact of the grants may be lower than the initial demand response suggests.”  

The group flagged concerns the grants could have pulled demand forward from future years, as well as uncertainty around elevated levels of unemployment and levels of population growth affected by the WA border closure.

This resulted in HIFG forecasting 14,000-18,000 dwelling commencements for the 2021-22 financial year, suggesting there was potential for a downturn in housing starts once stimulus measures were wound back.

“The future outlook remains incredibly uncertain, with COVID-19 continuing to impact local and global conditions,” Professor Rowley said.

“Uncertainty over employment, population growth, borders and government support mean it is difficult to forecast over anything but the short term.

“HIFG will meet again later this year to update its forecasts and comment on conditions. However, the housing market is showing remarkable resilience and while any recovery will be uneven, there are encouraging signs in many markets.”

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