08/12/2020 - 00:30

Housing starts on the right track

08/12/2020 - 00:30

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The Housing Industry Forecasting Group has reviewed its dwelling commencement predictions for Western Australia to 18,500 dwellings across 2020-21.

The HIFG’s revised forecast for the state’s dwelling starts is back on track for 2020-21, within the range it previously forecast for 2020-21 in October 2019. Photo: Gabriel Oliveira

The Housing Industry Forecasting Group has reviewed its dwelling commencement predictions for Western Australia to 18,500 dwellings across 2020-21.

The revised forecast fits within HIFG’s previous estimation of 18,000 to 20,000 dwelling starts that it forecast in October 2019.

Housing activity prompted by government stimulus packages is expected to continue to flow through to impact dwelling commencements in 2021-22.

HIFG chair Cath Hart said the improved level of new home building activity in WA would extend into 2022, as a result of both the state government’s BuildingBonus program and the federal government’s HomeBuilder scheme.

Titled land supply has emerged as a key challenge in recent months, with the HIFG reporting that developers were facing low-levels of titled stock, however close to 4,000 lots are under construction – more than half the numbers than this time last year.

Those lots are expected to be released to market within the next 12 months.  

“Recently announced changes to the construction start times for the scheme will help moderate shortages of title land and trades,” Ms Hart said.

“However, dwelling starts in WA are expected to remain below the state’s long-term average of 22,000 for the foreseeable future.”

HIFG has forecasted 14,000 to 18,000 dwelling commencements for 2021-22 and is anticipating 16,000 to 20,000 housing starts for 2022-23.

HIFG expects the extension of construction start times under the state government’s Building Bonus program (to 12 months after signing a building contract) will help moderate a potential downturn in commencements when stimulus measures end.

However, the group expected building timeframes to lengthen as a result of the increased volume of work, which had been compounded by reported labour shortages.

“HIFG also noted that housing supply is emerging as a key challenge for WA in early 2021,” Ms Hart said.

“WA’s extraordinarily low rental vacancy rate signals strong consumer demand and a lack of supply as people have moved to Western Australia or returned here from interstate and overseas as a result of COVID-19.

“However, despite the low rental vacancy rate and record-low interest rates, investors have not yet come back into the market to provide additional stock as might ordinarily be expected.”

The rental market could be further impacted by the lack of multi-residential starts.

The HIFG said building approvals had broadly reflected new home sales and that the multi-residential sector had softened – representing nine per cent of approvals in August 2020, compared to 48 per cent a year ago.

Commencements of multi-residential dwellings fell below 3,000 in 2019-20, the HIFG noted, the historic low presenting a lack of diversity in the residential market, which could also translate to a lack of affordable options for home buyers.

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