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Category: Housing Industry / Government and Politics

Drop in WA house construction should be warning to Government, says industry group

Wednesday, 16 Mar 2016 14:41:59 | Garrett Mundy

About 24,500 houses are forecast to be constructed in WA in the current financial year. (ABC News)

A dramatic drop in new home constructions in Western Australia should be a warning to the State Government, according to the Housing Industry Association (HIA).

The HIA's State Outlook Report has forecast a 21.3 per cent decline in new dwelling builds for the 2015/16 financial year, with roughly 24,500 new homes to be constructed.

However, that fall followed a record year for builds in 2014/15, when more than 31,000 dwellings were started.

The report also predicted new constructions would continue to contract for a further two years, bottoming out at approximately 20,800.

HIA executive director for Western Australia John Gelavis said the dramatic decline was largely due to a fall in migration.

He said the forecast drop in builds should be a concern for the State Government amid more general uncertainty about the WA economy.

"It does have an impact because it's a $6.5 billion industry ... and about 11 per cent of the state's workforce," Mr Gelavis said.

"So it has a huge multiplier effect across the economy."

WA housing industry calls for apprentice support

He said the sector employed tens of thousands of West Australians, including almost half of the state's apprentices, and the Government needed to ensure their future.

"We'd like to see the Government take a strong interest in this and continue to support housing through some of the other mechanisms that are in place," Mr Jelavis said.

"In particular a focus on first home owner grants, stamp duty exemptions etcetera. Keystart home loans from a finance perspective are also critical.

Building apprentice cuts timber Photo: The housing industry wants to see more government support for apprentices. (ABC News: Michael Atkin)

"But also we'd like to see them take an interest in ensuring apprentices can continue their apprenticeships and be the next workforce when the industry returns to solid numbers."

Analyst Gavin Hegney said the potential loss of jobs in the building industry would be significant.

"I draw a parallel that on average it takes about five people full-time to build a house while a house is being built," he said.

"So when you see 500 less homes being built, chances are there's 2,500 jobs being lost in the industry as a result."

But Mr Hegney said the report was not all bad news, with prices set to come down in the short term, before again swinging upwards.

"I think in the next 12 months we're going to see building costs come down," he said.

"It bodes well for price growth in two to four years time."

WA rental vacancies highest in Australia

The report also highlighted the rental vacancy rate in Western Australia, which was the highest in the country at 3.9 per cent.

Mr Hegney said that was another indicator of the softening real estate market, with cheaper rents easing pressure on tenants to buy their own properties.

"The tenants of today are the buyers of tomorrow," he said.

"It gives them scope to save their deposits at a far greater rate than if every one of their dollars is going out in rent."

AustraliaPlus


 

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