The Housing Industry Association has again revised down its outlook for WA housing starts this year, predicting a 12 per cent drop during 2008-09, according to its market outlook report released today.
The agency was previously forecasting a 3 per cent decline in new home starts, but revised its position to account for interest rate rises, higher petrol prices, share market volatility and the global credit crunch.
It now estimates that 18,700 new homes will be built this financial year, which would lead to a shortfall of 10,000 dwellings.
HIA WA executive director John Dastlik said a modest recovery was not expected until 2009-10 at the earliest.
“Sharply higher borrowing costs, increased construction costs, together with hefty government charges including “tax on tax effects”, have generated further weakness in leading housing indicators,” said Mr Dastlik.
“Interest rate reductions will, in time, boost confidence and then construction activity…[but] we have a relatively inelastic supply side, so no immediate bounce is expected.”
The HIA’s figures show home building activity fell in the June quarter, with building approvals dropping 16.4 per cent since March.
New home finance was 20.6 per cent lower than its level during the previous year.
The HIA is forecasting an increase in housing starts of 6 per cent over 2009-10 and 2010-11.
