Housing finance approvals up but new house sales fall

The number of homes built will increase in 2018 but there will be only a modest recovery during the next four years, according to the HIA.

WHILE there was a big increase in the volume of new dwelling approvals in Western Australia during September new detached house sales fell by 15.1 per cent.

Housing Industry Association WA executive director John Gelavis said the jump in new dwelling approvals shown by ABS figures on building approvals for September was affected strongly by the apartment-multi-unit market.

But even so it gave him confidence the state was recovering from one of the worst downturns in history.

Housing Industry Association senior economist Shane Garrett referenced statistics from the latest edition of the HIA new home sales report.

Mr Garrett said the decline in home sales in September reflected the slowing in output across the national economy and was a guide to short term activity in the residential building industry.

He said new home sales was a leading indicator of approvals data – NSW (+3.7 per cent) was the only state to record growth in new detached house sales.

Mr Gelavis said the outlook was not for a rapid return to growth in the Perth metropolitan area just yet but the association was confident the housing sector had just passed the bottom of the downturn.

“The improving outlook for Perth will start to filter through to the rest of the state in coming years,’’ he said.

“We expect that the number of homes built in WA will increase in 2018 but it will be a quite a modest recovery over the next four years, at least.

“This is a consumer’s market – making it a great time to build a new home.’’

Mr Gelavis said the ABS data showed overall, new dwelling approvals across WA grew  by 27.1 per cent during September and took into account a 5 per cent decline in new detached house approvals.

“More noteworthy was the more than doubling of approvals for multi-units ( up by 165.1 per cent) over the course of the month, which is often a reflection of the erratic nature of approvals in this segment of the market.

“There are signs that state growth is improving – an uplift in business and public sector investment is contributing to an increase in activity in the construction sector.

“Investment in new roads, bridges and telecommunications infrastructure is starting to have a positive impact on employment in the sector, which will assist in continuing to grow the population in WA.

“We have also seen a small increase in both the volume and the value of residential land being sold in Perth.

“This is one of the first signs of a recovery in a housing market.

“More houses being built means more employment opportunities and a strengthening economy.’’

He said there were also early signs WA’s rate of population growth may be starting to increase again, from a low base.

“Population growth is at the core of a strong economy and there are signs that the improving labour market in WA is attracting more people to live in the state.

“This has helped achieve an uplift in financing for new dwellings.

“All of these indicators are promising signs that the worst of the building downturn is behind us.