16/07/2009 - 00:00

Rubbery figures for home needs

16/07/2009 - 00:00

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FORECASTING has never been more difficult for those in the real estate industry, as predictions of future housing demand from national industry bodies counter opinions from local builders and representative groups.

Rubbery figures for home needs

FORECASTING has never been more difficult for those in the real estate industry, as predictions of future housing demand from national industry bodies counter opinions from local builders and representative groups.

Last week, the Residential Development Council of Australia forecast the need for more than 17,000 new homes each year in Perth for the next five years to cope with its growing population.

Council president Caryn Kakas said builders in Perth were currently delivering 10,701 houses and 2,855 attached dwellings each year.

However, Western Australian builders, building groups and industry bodies have differed in their assertions regarding the level of building currently taking place in Perth, as well as the underlying demand for homes.

The Housing Industry Association, Australia's largest residential building organisation, produces its own figures forecasting future levels of underlying demand as well as hard data from local builders on completed homes.

HIA executive director, John Dastlik said his organisation's figures for underlying demand requirements were substantially more than those produced by the Residential Development Council.

"They're saying the underlying requirement in Perth is 17,000 units up until 2014 ... when, even in the last seven or eight years during the 2000s, we've averaged 20,000 to 21,000 units [completed] per annum" Mr Dastlik said.

"That's the need out there but the underlying requirement, based on population growth, is substantially a lot more than that, in our view.

"Our [underlying demand] figures for last year are 28,000 and averaging around the 27,000 mark for the next two or three years."

Mr Dastlik is confident about the accuracy of those figures, emphasising the HIA economics unit work on them constantly.

One builder who is also confident in the HIA figures is JHW Group managing director Julian Walter.

Mr Walter, who delivers about 1,500 homes a year across his group, which includes Plunkett Homes, In Vogue Living and Rural Building Company, disputes the figures from the RDCA.

"I'm a bit miffed, a bit confused as to where these numbers are coming from because I just can't see them," Mr Walter said.

"My first reaction to all of this is to say to these guys, prove your figures."

Plunkett Homes managing director and HIA president, Tony Pritchard, believes most people are grappling to understand how great an effect the financial crisis will have on long-term migration and, in turn, demand for housing.

"Putting my building hat on, I think that long-term demand is definitely above 17,000, simply because we've been building at, at least those levels for the past four or five years," Mr Pritchard said.

"The bottom line is migration figures into the state are huge.

"We've got tens of thousands of people coming into the state and they have to live somewhere.

"Logically, if migration figures are vastly different to what they were in the '90s and early part of the 2000s, you'd have to be talking about demand well in excess of 20,000 a year."

It's a sentiment shared by one of the state's largest residential homebuilders, ABN Group managing director, Dale Alcock, who has built more than 3,000 homes during the past two years.

"It seems based on history, based on where we've been, based on activity generally; my gut feel would be underlying demand would be somewhere between 22,000-24,000, somewhere in there," Mr Alcock told WA Business News.

But Mr Alcock doesn't entirely agree with the HIA's forecasts for underlying demand over the next few years, suggesting a figure above 26,000 is too high.

But in a further illustration of the imprecise nature of forecasting, a recently released state government planning document, Directions 2031, indicates an underlying demand of 17,000 dwellings over the next 20 years, which Mr Alcock suggests is "just too low".

 

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