Slow increase in the number of dwelling commencements
The Housing Industry Forecasting Group (HIFG) has released their newest report, which forecasts dwelling commencements in Western Australia for the financial years 2019-20 to 2021-22.
The established housing market is soft
The key insights of the report are:
• Dwelling commencements in Western Australia decreased by 14 per cent in 2018-19 and it is expected to remain flat over the coming year. It is expected there will be a slow increase in the number of dwelling commencements over 2020-21 and 2021-22.
• Low levels of population growth, in combination with high levels of housing supply already in the market, has reduced the demand for newly built homes.
• The rental vacancy rate for the Perth Metro region has continued to fall, and is now at 2.5 per cent, below what is considered a ‘balanced’ market.
• The established housing market remains soft overall, with further declines in the median house price over the past year.
Shelter WA is concerned, that despite lower house prices and rents, housing affordability is still a crucial problem for those on very low to low incomes, for both home ownership and private renting. The low levels of construction activity that we are witnessing at the moment, together with a tightening private rental market, could result in housing supply and housing affordability issues in the medium-term.
Building social infrastructure now will help
Shelter WA sees this economic downturn as an opportunity for countercyclical investment in more social and affordable housing. Investing in social infrastructure will boost the economic outlook and create jobs.
Countercyclical investment in social and affordable housing can also benefit private investors. In a housing or retail market downturn, when other real estate assets become riskier and credit tightens up, having a government partner may become more attractive for corporate investors than they may have previously been.
Read the full report here.