Housing outlook still bleak despite rise in approvals

THE outlook for the housing industry remains very bleak and the recent increase in approvals should not be interpreted as a recovery, says BIS Shrapnel in its latest Building Industry Prospects.

“The increase in dwelling approvals in the December quarter was good news, but if you combine the two quarters the figure is one of the worst in the last 20 years,” BIS Shrapnel building services director Robert Mellor said.

Mr Mellor has revised downward his recent national estimate of 117,600 dwelling commencements to a maximum of 115,000, the lowest level since 1982-83 and some 33 per cent below the level of commencements in 1999-2000.

“The ‘post-GST correction,’ a slowing economy, rising unemployment and continued excess supply in most markets outside of Sydney and Melbourne are the principal reasons for the downturn,” says the Building Industry Prospects.

“The WA downturn in dwelling approvals of 43 per cent in the six months to December has been more severe than expected. A slight upturn in detached housing approvals should occur over the next four months, but overall dwelling commencements will decline by at least 35 per cent in the current financial year.”

But Real Estate Institute of WA president Graham Joyce said the year had started promisingly for the real estate industry with evidence that the bottom of the current cyclical downturn in the real estate market occurred late last year.

There were 3,466 established house sales in WA during January – an 8.6 per cent increase over December.

However, the January sales were still 28 per cent down on the same month last year.

“The average selling time for properties in January was 58 days, which is seven days more than the previous month. The longer selling time in January was mostly due to more sales of properties that have been in the market for a long time,” Mr Joyce said.

“Another encouraging feature of the real estate market is the stability of property values throughout the sales downturn last year.

“The stability in property values in January was apparent in both the Perth metropolitan area and the State’s regional centres.”

The median price of established houses sold in WA in January 2001 was $150,800. This is unchanged from the previous month a 5.6 per cent more than the median house price in January 2000.

“We still expect the improvement in the real estate market to continue in the coming months,” Mr Joyce said.

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