CONSTRUCTION of houses and other dwellings in Western Australia is expected to stay below underlying demand for the next two years, a new report by the Housing Industry Forecasting Group has found.
CONSTRUCTION of houses and other dwellings in Western Australia is expected to stay below underlying demand for the next two years, a new report by the Housing Industry Forecasting Group has found.
The forecasting group, chaired by the Real Estate Institute of Western Australia’s Stewart Darby and comprising a mix of industry and government representatives, has forecast dwelling commencements will improve in the coming year by 8.5 per cent to 20,000.
Looking further ahead, commencement will either be steady or rise slightly to 21,000 in 2010-11.
This would be the first recorded increase in commencements after consistent falls following the state’s boom-time peak in 2005-06 of 25,722.
Commencements have dropped to a decade-low of 18,436 in 2008-09 as the combined effect of increased supply and falling demand due to the global economic slowdown reduced activity.
The forecasting group said that underlying demand for housing in WA was as high as 24,500 dwellings per year.
However, the group admits its research does not determine the real demand for housing and believe more work needs to be done to clarify exactly what ‘underlying demand’ actually means.
In regard to land supply, with a stock of 73,000 proposed lots of land currently holding conditional approval, the group does not anticipate there to be a shortage of land in the immediate future, estimating that the current inventory could last up to 21 years.
“However, once there is an upturn in demand for housing, (the group) believes the stock land will be quickly absorbed and there is a need for developers to respond and government at all levels to ensure a smooth land development process to prevent blockages in the system,” the report stated.
The release of the report followed a meeting last week between Housing Minister Troy Buswell with a range of housing and property industry leaders, to develop policies to ensure land shortages do not re-occur.
“As a result of the meeting, the government has agreed to work with industry to identify a range of subdivisional opportunities that we can fast-track and attempt to bring forward, really to provide an insurance policy to the people of WA, in terms of land supply, to make sure that we don’t see the massive spike in house prices that we saw between 2004 and 2006,” Mr Buswell said after the meeting.
“Certainly one of the significant negative outcomes of the last period of sustained economic growth in WA was that land supply evaporated.
“We will now take very firm action and partner with industry in the short- to medium-term to provide the land supply that the industry needs to prevent that happening.”
