Housing Industry Association data shows that new housing sales are increasing in WA, but skills shortages persist.
New home sales are starting to increase in Western Australia, despite a forecast national decline in home building activity, Housing Industry Association data shows.
HIA has today launched its economic outlook for WA, revealing a 10 per cent increase in new home sales compared to the same time last year, and 40 per cent higher than 2019.
In 2019, the state’s housing activity was at a low point, after a five-year downturn, and new home sales spiked rapidly in 2020 following government stimulus brought about during COVID-19.
That was followed by a drop-off in new home sales last year as the stimulus ran out and builders struggled to complete builds on time, because of skills and materials shortages.
HIA chief economist Tim Reardon said the latest data showed that the economic fundamentals in WA had changed significantly compared with before the pandemic.
“A return of strong population growth from overseas and interstate, attracted by higher wages, has seen demand for new homes grow,” he said.
“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 late 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.”
Australian Bureau of Statistics data showed that the number of houses under construction in WA have hit a record high of 21,524.
This is partly due to the gap between home starts and completions, as build times increase.
Mr Reardon said a slowdown in building on the east coast could attract more workers to WA, but it wouldn’t be the panacea.
“The skills shortages are likely to persist, albeit below the acute levels observed over the past two years,” he said.
“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.”
WA’s detached house commencements in 2022 were 29.1 per cent down from a peak in 2021, but still stronger than any other year since the mining boom, HIA data showed.
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.
Mr Reardon said he expected home starts to recover into next year, with commencements increasing 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,” Mr Reardon said.
The report will be launched at HIA’s economic outlook lunch in Perth today.
