03/12/2008 - 22:00

Housing to soften further

03/12/2008 - 22:00

Bookmark

Save articles for future reference.

TWO separate reports on the state's housing sector have painted another soft year as rate cuts and stimulus packages fail to resurrect the weakening industry.

Housing to soften further

TWO separate reports on the state's housing sector have painted another soft year as rate cuts and stimulus packages fail to resurrect the weakening industry.

Housing lobby groups from around the country say the central bank's decision to cut rates by a further 100 basis points this week will take some time to make an impact, with the higher rates from previous years yet to end their reign.

In its outlook for WA, the Housing Industry Association has forecast housing starts to be weaker for a third straight year for 2008-09, with numbers to drop by 16 per cent.

HIA executive director John Dastlik said the rate cuts and the increases to the first home buyers grant will underpin a recovery in 2009-10.

"Housing starts will be significantly weaker for a third straight year in WA in 2008-09, reflecting the lagged impact of higher interest rates last year running head on into the global credit crisis, a waning boost from the resources sector and lower household and business confidence," Mr Dastlik said.

"We do expect to see a moderate recovery in new home building over 2009-10 and 2010-11 and this will be very important in bolstering overall activity in the WA economy."

Housing starts are forecast to grow by 5 per cent in 2009-10 and by 7 per cent in 2010-11.

Meanwhile, a survey by Masters Builders and Grant Thorton of industry conditions for the September quarter showed the first home buyers market will be the driving force, as stagnation occurs in other sectors.

The survey found that while the state's commercial building sector remained strong, there was growing concern that many projects could be postponed or cancelled due to global uncertainty.

However, any signs of a slow down on-site remain to be seen, as the lead-time between project financing and construction are long.

"The peak of the current cycle appears to have passed in this sector," the survey concluded.

Of the 63 builders surveyed, 90 per cent reported average to above average profits for the September quarter in the housing sector.

Better cost management, improved productivity and better job control all contributed to the result, the survey found.

Seventy two per cent of respondents reported average profits in the commercial sector.

The survey also found that demand pressures in the labour market had eased over the past four months, with the employment monitor 32 per cent lower compared to last year.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options