16/12/2008 - 10:05

WA dwelling starts drops 20%

16/12/2008 - 10:05

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Western Australian dwelling commencements has slumped 20 per cent in the September quarter, nearly double that of the Australian trend.

Western Australian dwelling commencements has slumped 20 per cent in the September quarter, nearly double that of the Australian trend.

Latest date from the Australian Bureau of Statistics revealed dwelling starts in WA fell from the June quarter's 5943 units, seasonally adjusted, to 4724 units.

In comparison, New South Wales was hardest hit with dwelling commencements plunging 25 per cent for the quarter to 6069 units, seasonally adjusted, while Queensland fell 23 per cent to 8700 units, seasonally adjusted.

Dwelling commencements in Victoria rose by 10 per cent to 10,707 units while South Australia jumped 19 per cent to 3560 units, seasonally adjusted.

Nationally, the figure fell by 10.7 per cent to 35,425 units, seasonally adjusted from an upwardly revised 39,649 units in the June quarter.

In the year to September 2008, total dwelling commencements fell by 9.1 per cent, seasonally adjusted.

JP Morgan economist Helen Kevans said it was no surprise housing starts posted their largest quarterly fall since 2000, given that interest rates were at 12-year highs during July and August.

"Early in the quarter, sentiment was rocked by high official interest rates, the lingering impact of the global credit crunch, and plunging auction clearance rates," Ms Kevans said in a research note.

Ms Kevans said excessive red tape in the building sector, the slow rate of local council approvals and early evidence of house price weakness added to the poor sentiment.

The Reserve Bank of Australia (RBA) started its easing cycle in September when it cut the cash rate by 25 basis points to seven per cent.

The central bank followed the September move with a series of aggressive cuts that has lowered the cash rate to 4.25 per cent.

Housing Industry Association (HIA) chief economist Harley Dale said the annual level of housing starts had fallen to 141,700 and was expected to drop well below the 140,000 mark in the December quarter.

This was below the HIA's estimate for underlying housing demand of about 190,000 housing starts per year.

Mr Dale said recent interest rate cuts and the federal government's fiscal stimulus package was cause for optimism, but the lack of available credit was having a detrimental effect on the housing industry.

"The longer the current negative impacts of the credit crunch and general uncertainty persist, the greater the risk such a recovery fails to materialise", Mr Dale said in a statement.

 

 

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