WA housing starts recovery in 2011: HIA

The Housing Industry Association has forecast that a significant recovery in housing starts in Western Australia is not expected until financial year 2010/2011.

The Association's state economic outlook for the September quarter indicated a recovery in new home building is forecast to gather momentum in 2010/2011, with the number of WA starts growing by 14 per cent to 23,010 and a further 2 per cent to 23,470 in 2011/2012.

However, the outlook indicated the most pertinent issue for growth in the sector was on the supply side, with concerns about the adequate and timely availability of land.

Relative to underlying demand, the level of housing starts forecast by the HIA is very weak, as housing completions for 2009 and 2010, based on very poor starts numbers, will remain significantly below demand levels.

On a calendar year basis, housing starts are forecast to decline by 10 per cent in 2009, to a level of 18,680, following a fall of 9 per cent last year.

In 2010 starts are forecast to grow by 15 per cent to a level of 21,570. 2011 should see further growth of 8 per cent, bringing starts to a healthier 23,240 dwellings.

As starts improve over 2010 and 2011 completions will also pick up, although still well short of expected underlying demand levels.

The HIA's outlook did indicate a noticeable recovery was underway in total building approvals, which increased by 5.9 per cent in September, contributing to an 11.9 per cent increase over the September quarter.

But the HIA was concerned about the disconnect between the rate of growth in new home lending relative to building approvals, and the continuing weak state of the high density segment of residential construction due to a lack of available finance.

The HIA also reported a last minute rush ahead of a cut to the First Home Owners' Boost saw new home lending commitments surge in the September 2009 Quarter, but the total number of seasonally adjusted loans decreased by 0.9 per cent.

The number of loans for construction was up by 73.4 per cent in the September 2009 quarter compared to the same period last year, while the number of loans for purchase of a new dwelling was up by 34.3 percent in the quarter, compared to last year.

In the residential investment market, there were signs of a recovery in August with four consecutive months of growth, but the value of lending for construction of dwellings for rent or resale was down by 27.8 per cent in annual terms.