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eTradesman.com.au - Australia's Online Tradesman Directory

WA Housing Report Card Highlights Cracks Appearing in Boom Times

Western Australia’s most comprehensive housing report card highlights a strong 2006, but acknowledges that there may be tough times ahead as the industry fights against the headwinds of very low affordability. Commenting today on the release of the December 2006 quarter HIA WA State Outlook publication, HIA Acting Western Australia Executive Director, Ms Sheryl Chaffer, said that the crisis in housing affordability and a lack of available land would mean a lower level of residential activity in Western Australia over 2006-07. “New building activity will be softer this year on account of record house price growth and a lack of developed serviced land,” Ms Chaffer said. “House prices grew by almost 40 per cent over 2006, and while this probably will not be repeated over 2007, we are still expecting double-digit price growth which will stifle any potential for another strong year in WA housing, and put further pressure on the State’s first home buyers.” “Half way through 2005, the first home buyer market was looking to recover to pre-2003 levels of activity, however, the recovery has been snuffed out and first home buyers now make up less than 15 per cent of the WA home buying market.” “The onus is on all levels of government to fully recognise the affordability concerns that now replicate Sydney’s situation three years ago, and work together to ensure that the unsustainably high barriers to new home entry are reduced,” Ms Chaffer said. “The gap between the cost of new housing and what medium and low income households can afford to pay is wider than ever. Stable interest rates in 2007 won’t bridge that gap, only government action will,” Ms Chaffer added. “Spending on renovations, meanwhile, will hold at healthy levels as house price gains persist and the substitution from high cost new housing continues.” “A shortage of developed land will see housing starts fall by a forecast 8 per cent in 2006-07 following a 13 per cent rise over 2005-06. We expect that this will be followed by a 13 per cent fall over 2007-08.” “There is an upside risk to this forecast, but any potential for this to follow through will be dependent on house price growth over the coming 12 months, as well as a pick up in residential lot approvals by the State Government.” “Investment in renovations eked out a 0.3 per cent gain in 2005-06. We are forecasting growth of 2 per cent in 2006-07 which will take spending on renovations to over $2.7 billion, yet another all time record high.” Source: HIA
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