Strong recovery for residential building

The Housing Industry Forecasting Group has tipped housing starts will increase by 20 per cent over the next year, followed by a 5 per cent fall in 2011.

The HIGF is now forecasting that housing starts will increase in 2010 by 20 per cent to 22,000.

In December the HIFG predicted housing starts would improve in 2010 by 8.5 per cent, to 20,000.

The group forecast there would be a five per cent fall in housing starts in 2011, down to 21,000.

The 2011 forecast is consistent with the HIFG's December figures.

The latest HIFG data indicated trade-up buyers and investors have bolstered the new housing market, with building approvals in WA for the financial year to March reaching 23,450, boosted by the presence of first homebuyers..

HIFG chair Stewart Darby said this growth in building starts was stronger than expected, but expected building approvals to taper back to around 22,000 by the end of June.

Combined with a boost in social housing construction through government stimulus packages, this trend has more than offset the fall in demand from first homebuyers exiting the market.

"While there has been much media commentary about impending land and housing shortages in WA, HIFG foresees no immediate shortage with developers now pre-selling to meet current demand," Mr Darby said in a statement released today.

"Access to financing and regulation remain threats to increased land supply should demand accelerate in the short term.

"However various indicators suggest the housing system is meeting current demands with buoyant supply available in most established markets across WA at the same time as vacancy rates remain above equilibrium levels."

But Mr Darby acknowledged the need for all levels of government to work with the development industry in a timely way to prevent development of bottlenecks in land and building approvals.