Home building activity will continue to shrink over the next 12 months in Western Australia, with the state’s residential construction companies having to wait until 2020-21 for any improvements in a sector that has been in decline for a half decade.
Fresh forecasts by the Master Builders Association indicate housing starts will hit a cyclical trough of 14,566 in 2019-20, a 6.1 per cent reduction on the previous year and the fifth consecutive year of decline.
Master Builders Association of WA executive director John Gelavis said building starts were expected to lift by 5 per cent in 2020-21 to hit 15,302, rising to 16,057 in 2021-22.
A gradual recovery to 17,888 starts in 2023-24 has been forecast, however, those levels of activity would still remain well under WA’s record high of 31,752 housing starts in 2014-15.
Mr Gelavis said there were several signs the WA economy was starting to recover momentum, which could only mean good news for the housing sector.
“The depressed levels of new homebuilding activity over recent years mean medium-term demand for housing in WA is not being fully met,” he said.
“As housing supply remains below demand over a prolonged period, house prices and rents will stabilise and bring about growth in building activity.”
Master Builders also predicted growth in engineering construction, but also cautioned any recovery would be from a low level of activity.
Mr Gelavis said government infrastructure commitments would lead to an increase of 20.9 per cent of engineering construction activity in 2019-20, moderating to a 15.5 per cent uplift in 2020-21.
“While growth is expected to peter out towards the end of the forecast horizon, we expect by 2023-24 the volume of engineering construction in WA will be 44.2 per cent larger than 2018-19,” he said.
“Master Builders commends the McGowan government for its focus on construction work, and urges the state and federal governments to work together to fast-track the Perth Cities deal announced on Friday and further infrastructure projects which will kick-start growth, unlock housing, create jobs and get the economy moving.”
