The state's housing construction market is tipped to remain at its strongest level in years on the back of a 34 per cent increase in dwelling starts in 2012-13.
The state's housing construction sector is tipped to remain at its strongest level in years on the back of a 34 per cent increase in dwelling starts in 2012-13.
Dwelling commencements fell to their lowest point in more than a decade at a revised level of just less than 18,000 in 2011-12, but surged last financial year to reach 24,000, according to the latest report by the Housing Industry Forecasting Group.
The HIFG expects the number of dwelling starts to remain steady in 2013-14 before easing to 22,500 in 2014-15 and hovering around 21,000 for the next two years.
The level of activity in 2012-13 exceeded the 22,500 starts the HIFG had anticipated in earlier forecasts.
"Following the subdued state of Western Australia's residential construction market in 2011-12, 2012-13 saw the sector return to a strong growth partly because of increased demand stimulated by stronger population growth, which led to tightening of housing supply in Perth, the rapid rise in rents to June 2013 and home loan rates at historically low levels," the report said.
First Home Owner Grant applications increased by 33 per cent in 2012-13, with growth particularly strong in grants for new dwellings.
Urban Development Institute of Australia WA chief executive Debra Goostrey said a range of data showed the building sector was going strong.
"The market has fully recovered from the impact of the global financial crisis and the level of confidence is quite robust," Ms Goostrey said
"At the moment, land supply is keeping up with demand so we are seeing steady price increases, which is good for everybody."
While the HIFG anticipates that a transition in the WA economy from investment to export-led growth could have a more damaging impact on housing demand than is currently anticipated, it expects historically low interest rates to sustain relatively strong demand over the coming years.
The group has put residential land supply requirements at 18,000 lots per annum, the majority of which will need to be provided through new land or infill development.
The HIFG has warned that a trend towards smaller, staged developments as a result of restricted credit supply in the wake of the GFC could threaten the state's capacity to meet this demand.
"Although final lot approvals for Perth have picked up strongly since the low point in 2012, continued restrictions on access to finance mean developers are providing lots for immediate demand rather than adding to stock numbers," the report said.
"While there is an overall sufficient supply of residential land available to meet demand for the immediate future, HIFG remains concerned about the capacity of the sector to supply sufficient serviced, titled lots to meet future demand in a timely manner."
Planning Minister John Day said the government was committed to a strong planning reform agenda to make land available.
"The planning approvals process plays an important role in bringing land to market and current data shows there is enough land zoned for residential development for more than 20 years," he said.
"Reform of the Residential Design Codes, the relaxation of the requirements for granny flats and improved timeframes for subdivision approvals have all contributed to stimulating the development sector to offer people affordable housing options."
The HIFG will update its forecasts in April next year.