17/12/2009 - 00:00

Residential building to recover

17/12/2009 - 00:00


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COMING off the boom levels of residential construction experienced from 2006 until 2008, the past 12 months has been a slow period for the building sector, according to industry analysis.

Residential building to recover

COMING off the boom levels of residential construction experienced from 2006 until 2008, the past 12 months has been a slow period for the building sector, according to industry analysis.

Latest statistics released this week by the ABS showed 18,507 housing starts in Western Australia in fiscal 2009, down from boom levels of 22,448 in 2007/08 and 24,818 in 2006/07.

But according to trend estimates by the ABS, the residential sector is at the beginning of a revival, with commencements showing rises for two consecutive quarters, following four successive falls.

Both the Housing Industry Association and the Housing Industry Forecasting Group agree a recovery in building starts is underway, but only the HIFG was willing to predict that a significant recovery would be felt next year.

The HIFG predicted housing starts would improve in 2010 by 8.5 per cent, to 20,000, while commencements would be steady, or rise slightly to 21,000 in 2011.

The HIA’s forecast was for a significant recovery in fiscal 2011, with the number of starts growing by 14 per cent to 23,010 and a further 2 per cent to 23,470 in 2011/12.

But both groups’ research indicated deep-seated issues in terms of residential supply and the adequate and timely availability of land.

The HIFG said underlying demand for housing in WA was currently as high as 24,500 dwellings per year.

JWH Group managing director Julian Walter told WA Business News a recovery was underway for housing starts, but significant delays in development approvals posed a problem for builders.

“We’re revising our budgets upwards, we revise every three months regardless, but after some downwards movement over the last twelve months, and we’ve met all the downgrades we put in there, now all the divisions are coming back in with upgrades,” Mr Walter said.

“They’re talking in some cases of an upgrade already of 15 per cent for the year, which is pretty dramatic. It’s a frighteningly fast turnaround.

“You’ll find the industry has had two, possibly three, very, very good months, and that won’t reflect in the statistics for four or five months.

“So anyone that’s out there thinking at the moment that the starts are off, the starts are certainly not, it’s mainly processing issues.

“The pipeline of the industry is up quite dramatically at the moment which is going to be a problem.”

In September Planning Minister John Day announced a proposal to streamline the approvals process through the introduction of ‘development assessment panels’, which would assess and approve infrastructure and development projects valued at more than $2 million in the metropolitan region and more than $1 million in regional areas.

While the proposal has been welcomed by developers, local councils such as the City of Perth, the City of Belmont and the City of Geraldton-Greenough have been vocal detractors of the proposed policy change.

In a statement released earlier this month, City of Geraldton-Greenough chief executive Tony Brun said the panels would result in regional planning decisions being made in Perth, which would only stifle regional development and disenfranchise regional communities.

Meanwhile, a significant jump in the price of residential land was the main theme to emerge from September quarter data released last month by the Real Estate Institute of Western Australia.

The data, based on Landgate sales information, indicated the preliminary median land price grew by just more than 11 per cent during July, August and September.

The quarter also saw an increase in the median price of houses, lifting from $450,000 to $460,000, which represented a 5.7 per cent increase for house prices, compared to the same period in 2008.



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