New housing starts in Western Australia are exopected to fall by 12 per cernt this year and a further three per cent next financial year, according to HIA forecasts released today.
New housing starts in Western Australia are exopected to fall by 12 per cent this year and a further three per cent next financial year, according to HIA forecasts released today.
Its report card on the residential housing sector in Western Australia highlights a weak short term outlook reflecting sharply higher borrowing costs, labour rates, and building materials prices.
HIA said the new home building sector is expected to soften for some time yet as higher interest rates and construction costs fuel a widening gap between the level of new housing required and the volume of new stock actually being built.
The one bright spot in the report is the conclusion that weak building activity will underpin the value of existing homes.
Commenting today on the release of the March 2008 quarter HIA WA State Outlook publication, HIA Executive Director, Western Australia, Mr John Dastlik, said that the new home starts cycle was unlikely to turn up again until 2009/10.
"Australia is enjoying its 17th year of economic expansion and the booming WA economy has much to do with this record run," Mr Dastlik said.
"At the same time, however, new home building is coming off the boil as the erosion in housing affordability continues," Mr Dastlik said.
New dwelling starts are forecast to fall by 12 per cent in 2007/08 and decline by a further 3 per cent in 2008/09. The up-cycle in starts ended in 2005/06.
"The lack of new housing supply is driving up rents, and is holding up real estate prices for existing housing stock," Mr Dastlik said.
"Right now, however, the chronic shortage of housing stock is generating a real social problem via a dislocating impact on lower income households. Policies on the table need to translate into activity on building sites, in a matter of months not a matter of years," said Mr Dastlik.
Contrary to new housing starts, the renovations sector is still very strong.
"Total investment in renovations is expected to increase by around 20 per cent in 2007/08, by far the fastest growth in the nation," Mr Dastlik said.
"That growth will see the value of renovations surpass the $4 billion mark for the first time."
"In part, the health of the renovations sector is fuelled by astronomical transaction charges on property coupled with taxes and charges on new residential dwellings," added Mr Dastlik.
A shortage of housing stock will maintain house prices, although rate hikes may see a moderate cooling in existing house prices.
"Talk of widespread falls in house prices is way off the mark," Mr Dastlik said.
