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{{propApi.successMessage}} {{region}} Change locationNew home building in WA defies rising rates
New home building in WA defies rising rates
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HIA released its economic and industry Outlook report for Western Australia today. The report includes updated forecasts for new home building and renovations activity across WA and across all home types.
“Sales of new homes in WA were increasing ahead of the last rise in interest rates,” added Mr Reardon.
“In the past three months sales of new homes increased by 10 per cent compared to the same time last year, to be 40 per cent higher than in 2019.
“This reflects the significant change in fundamentals for WA now, compared to pre-pandemic.
“A return of strong population growth from overseas and interstate, attracted by higher wages, has seen demand for new homes grow. This is supported by a return of economic growth, tax revenues and investment which has been hidden in official data due to the shocks of the pandemic.
“This change in fundamentals will see new home building trough in WA this year, following the end of the boom caused by stimulus and low interest rates.
“WA will be the first market that returns to growth in home building, and to a level well above pre-pandemic building.
“In addition, there is nearly four times the number of homes under construction in mid-2023 compared to 2020. This will ensure that there is ongoing strong demand for labour and migration, which will continue to see elevated demand for new homes.
“Despite the increase in supply of new homes, demand continues to outpace the capacity of the industry.
“A slowdown in home building across the east coast is not going to be a panacea for this problem. This skills shortages are likely to persist, albeit below the acute levels observed over the past two years.
“Attracting skilled workers, increasing the capacity of the manufacturing sector and increasing the supply of medium density housing are all necessary to capitalise on this change in conditions,” concluded Mr Reardon.
Detached house commencements in Western Australia in 2022 were 29.1 per cent down from a peak in 2021, but still stronger than any other year since the mining boom.
Commencements are forecast to reach a trough this year under the weight of higher interest rates and extreme supply constraints, down by 14.7 per cent to 13,260, the weakest year since 2020. A recovery thereafter is expected, with commencements increasing by 10.4 per cent, 12.3 per cent, 5.8 per cent and 2.8 per cent, to 17,900 by 2027.
Multi-unit commencements declined by 8.8 per cent in the final quarter of 2022, to the second-weakest quarter on record back to the 1980s. As the extreme constraints on home building in Western Australia ease, multi-unit commencements are forecast to increase on the back of strong fundamentals and years of underbuilding.
WA HIA Housing Starts Forecasts
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