29/11/2018 - 13:45

Housing construction to remain near record lows

29/11/2018 - 13:45

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The number of new homes being built in Western Australia has fallen to its lowest level since records started in 1984, with little signs of improvement predicted in the next few years, according to the latest report from the Housing Industry Forecasting Group.

Housing construction to remain near record lows
The number of new homes being built in Western Australia has fallen to its lowest level since records started in 1984.

The number of new homes being built in Western Australia has fallen to its lowest level since records started in 1984, with little signs of improvement predicted in the next few years, according to the latest report from the Housing Industry Forecasting Group.

The report from the HIFG, which includes representatives from state government departments and industry organisations, anticipates future new home construction figures to be flat, following a significant decline over the past four years.

HIFG has forecast 18,000 dwelling commencements for 2018-19, a level similar to 2017-18, followed by a slight rise in 2019-20 with 19,000 commencements.

The 2020-21 forecast sees between 20,000 to 22,000 dwelling commencements, and the report said this modest increase would be due to the anticipated population growth in the state.

The number of new homes built per 1,000 persons four years ago was approximately 3.6, while currently it sits at around 1.5.

HIFG chairman Steven Rowley said this was the most sustained downturn in thirty years.

“Population growth has been slower than expected and there’s an oversupply of houses in the established market that just aren’t moving,” Mr Rowley said.

“This has all led to softer demand for new builds.

“Until we see stronger population growth, we’re unlikely to see an improvement in dwelling commencements.”

Master Builders Association of WA housing director Jason Robertson said the reintroduction of the First Home Owner grant boost payment would be needed to curb the trend.

“These latest figures, coupled with housing investor loans having declined by 14.2 per cent in Western Australia over the past year, continues to ring alarm bells of the deterioration of market conditions,” Mr Robertson said.

“Considering the likely possibility of further tightening in lending conditions, interest rates forecast to rise by mid-2019 and the Foreign Buyers Surcharge expected to dampen demand from investors, Master Builders is calling for action by the WA Government.”

The HIFG report comes a week after the Real Estate Institute of Western Australia forecasted that Perth house prices and sales volumes are unlikely to improve significantly next year, but rental rates could increase.

The HIFG report also noted that house prices have fallen in two-thirds of the Perth metropolitan region, in conjunction with the rental vacancy rate tightening to a four-year low.

Mr Rowley said if this trend continues there would be a likely increase in rents which may lure renters into new purchases and builds.

“WA is still the state of the first home buyer, representing almost a quarter of the housing market,” Mr Rowley said.

“This is still much higher than the national average.

“Funding opportunities from Keystart, low interest rates and a buyers’ market have provided good conditions for first home buyers in WA.”

 

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