The HIA says Western Australia “continues to provide that rather quintessential example of how if you live in Australia but don’t directly benefit from the resources boom, then times are challenging”.
“The economy is on fire, but new housing is extremely weak. Indicators like housing finance point to improved times ahead, but current planning problems will prove a huge set-back to a short-term recovery. The renovations sector, meanwhile, is slowing from a record high.”
The HIA is forecasting a 15.8% decline in WA housing starts in 2011-12 to come in at 17,510.
Victoria keeps its crown as the new home building capital of Australia, but the HIA is forecasting a 19.4% fall to a level of 47,690 in 2011-12 followed by a decline of 12.6% in 2012-13 and a further 3.5% fall in 2013-14 to 40,240 starts.
The HIA adds that the risk to this outlook remains on the downside.
Looking at the national outlook, HIA chief economist Dr Harley Dale says it now appears unavoidable that new housing will revisit levels experienced as a result of the GFC.
This, he says will be to the “detriment of thousands of businesses and households, not to mention the overall domestic economy”.
“We are experiencing a combination of softer housing demand and high-cost housing supply, which together mean that the nation is under-building by a significant amount. Put simply, Australian consumers are nervous about the global and domestic economies, and meanwhile around $200,000 of the price of a new home is due to taxation. It’s an unsustainable situation,” he says.
“To improve the conditions facing new home building not only requires further interest rate cuts, but also Commonwealth and state government action to boost confidence and lift a substantial portion of the tax burden from new housing,” he says.
The HIA notes that the renovations sector has also showed signs of weakness in recent quarters, notwithstanding that total renovation investment hit a new record in 2010-11.
It expects renovation investment to fall by 1.5% to $29.5 billion in 2011-12, but to grow by 1.3% to $29.9 billion in 2012-13.
According to the federal government’s National Housing Supply Council 2012 report Australia accumulated a dwelling shortfall of 228,000 homes between 2001 and 2011 with the most acute shortage in NSW, with an estimated gap of 89,000 dwellings, followed by 83,000 in Queensland.
This article first appeared on Property Observer.
