HIA predicts home starts will rise

HIA predicts home starts will rise

AFTER more than five years of decline, things are finally looking up for the state’s home building industry, with the HIA predicting house starts will soon rise more than 21 per cent.

Its quarterly economic and industry outlook report forecasts detached house starts of 11,960 in 2018/19 will drop 4.4 per cent to 11,435 in 2019/20 before recovering by 21.5 per cent to 13,900 in 2020/21.

Multi-unit starts are expected to increase 2.9 per cent from 3530 in 2018/19 to 3630 in 2019/20 and a further 53.1 per cent to 5560 in 2020/21.

HIA WA executive director Cath Hart said several indicators, including population growth, building approvals and private new house sales, were already improving.

“New home lending was also heading in the right direction last year,” she said.

“The rental market has been strengthening, with rental prices improving since late 2018 and vacancy rates declining since mid 2016.

“First-home buyers have also started taking on larger loans, which is traditionally a precursor in WA to a broader recovery in dwelling prices.”

The State Government’s recent stimulus for multi-unit developments and the push in Perth for infill and higher density development would be contributing factors.

Ms Hart said the HIA was confident of a slow and steady industry recovery throughout 2020, especially considering interest rate cuts, tax cuts and the Federal Government’s First Home Loan Deposit Scheme.

“WA obviously went through a deep and protracted slump following the mining and resources boom but we are now in a situation where home building activity is undershooting demographic demand so the recovery is long overdue,” Ms Hart said.

She warned the effects of trade and tourism restrictions with China due to the Coronavirus outbreak was a risk to projections.

“We are closely monitoring the impact of this but as the effects are still emerging, we have not factored them into our forecasts,” she said.