There will be no recovery this financial year or next for Western Australia's sputtering housing construction sector, with dwelling starts tipped to drop 21 per cent on last year's figures, according to the state government's top forecaster.
The Housing Industry Forecasting Group's April update reiterated its October prediction of 20,000 dwelling starts for WA in 2010/11, down from 25,000 in 2009/10.
For 2011/12, The HIFG adjusted its forecast slightly downwards, from 21,000 starts to 20,000.
The HIFG said there could be a reduction of up to 5,500 first homebuyers over this financial year.
That loss of buyers will not be offset by trade-up buyers or investors, HIFG chair Stewart Darby said, resulting in a forecast for no improvement in housing starts for financial year 2011/12.
"With interest rates tipped to rise in due course, falling housing prices and low rental yields there is little to attract investors into the market to offset the absence of first homebuyers," Mr Darby said.
Mr Darby said the latest outlook suggested new housing starts would fall short of underlying demand over the next two years.
He said any growth in starts would be dependent on a lift in consumer confidence, no further interest rates rises and any funding boost the state government could provide for public sector housing and Keystart loans in Thursday's budget.
But the HIFG said that despite a shortage of affordable land in some preferred locations and for first homebuyers, overall there is adequate land supply.
Western Australian Planning Commission statistics for the December quarter showed 3,687 applications to develop residential lots were approved, a 35 per cent increase over the September quarter's and a 31 per cent jump from the same quarter of 2009.
The Perth metropolitan area accounted for 3,119 lots approved, with 568 in regional WA.
Mr Darby said the Department of Planning's latest initiative to collect information on demolitions in established suburbs was a necessary first step in understanding land supply and changes in the current housing stock.
He said continued planning reform agenda was required by all players to ensure adequate land supply for when demand rises again.
"Despite the recent rollercoaster in activity since the boom subsided in 2007 which has resulted in a general softening in activity across the housing system, we should not become complacent about the timing and speed of the next upturn which could be just over the current two year horizon," Mr Darby said.
"Now is a great time to get our knowledge base on land supply and development processes sorted."
