The state's housing market is expected to make a modest recovery over the next two years but will still fall short of underlying demand, a new report shows.
The state's housing market is expected to make a modest recovery over the next two years but will still fall short of underlying demand, a new report shows.
The Housing Industry Association's (HIA) quarterly outlook for Western Australia has predicted housing starts to fall 18 per cent in 2008/09 to 18,290, consisting of 14,390 houses and 3,890 units.
However the following two years will see a turnaround in the sector with housing starts to increase by 17 per cent to 21,600, comprising 17,500 houses and 4,100 units.
On a calendar year basis, HIA has forecast housing starts to fall by 7 per cent this year to 19,270 before growing 10 per cent in 2010 to 21,170.
"The underlying demand for new housing in Western Australia is estimated to run at around 27,000 dwellings per annum over the next couple of years," HIA said.
In calendar 2009, HIA estimates completion of 17,900 dwellings and then 20,300 dwellings in the following year.
"With completions falling in the medium term, WA will fall short of demand by around 6,000 to 9,000 dwellings annually which will contribute to a swelling housing shortage and related pressure on the rental market," HIA said.
In 2011, underlying demand is tipped to reach 27,000 while completions will be 21,200.
Meanwhile, HIA has forecast a "mild" improvement in affordability in the June quarter for first home buyers.
During the March quarter, the first home buyer affordability index for Perth improved 13.7 per cent while the index was up 16.6 per cent for regional WA.
The monthly loan repayment for a typical first home mortgage in Perth fell from $2,164 to $1,945 while in regional WA it dropped from $2,225 to $1,947.
Nationally, the housing sector is expected to recover in the second half of 2009, thanks to low interest rates and government stimulus spending, a peak industry group says.
The Housing Industry Association's (HIA) quarterly National Outlook forecasts new home starts will fall by 17 per cent to a total of 132,000 for the year to June 30.
However, the report, released on Thursday, predicts a rise of 11 per cent in housing starts for the following 12 months.
The HIA expected 129,500 dwellings to be completed in fiscal 2009 compared with 141,100 in 2008 and says it will take until 2011 before the 2008 level is reached again.
HIA chief economist Harley Dale said nation building efforts by the federal government, coupled with low mortgage rates, would lead the resurgence in housing.
Dr Dale said the recovery would be heavily constrained by economic uncertainty and rising unemployment even though demand would continue to outstrip supply by more than 50,000 homes a year until at least 2011.
"Even in the absence of the current troubled economic times, the perennial obstacles of inadequate land supply, insufficient skilled labour, and excessive taxation of new housing remain far from resolved," he said.
Dr Dale said renovations would continue to underpin the housing industry, accounting for 47 cents in every dollar spent in the market.
"Renovation activity hit a record worth of nearly $31 billion in 2007/08 and our forecast is for the value to be well on the way to $33 billion in 2010/11," Dr Dale said.
On Wednesday, the Australian Bureau of Statistics (ABS) announced that the value of construction work for the first three months of the calender year posted its biggest fall in almost nine years.
Total construction work fell 3.7 per cent in the March quarter, to a seasonally adjusted $35.47 billion,