Rate rises don’t put a dent in WA new home sales
Western Australia is bucking construction trends when it comes to residential construction.
The Housing Industry Association’s (HIA) New Home Sales Report found Western Australia is defying national trends, with HIA chief economist Tim Reardon expressing that the state is the “only exception” to low new home sales.
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He stated that sales of new homes nationally have remained low throughout 2023, and this will see the volume of houses commencing construction continue to contract into 2024.
Whereas in Western Australia, Mr Reardon said: “It appears that house building will defy the efforts of the Reserve Bank.”
“The volume of new home sales in Western Australia has increased since a trough in early 2023 resulting in sales in the three months to the end of November being 49.1 per cent higher than at the same time the previous year,” he outlined.
That sales strength “is now flowing through to a modest rise in approvals”.
According to the chief economist, it also means the state is expected to see “a steady flow of new home starts” in the year ahead.
But it’s not all positive, with Mr Reardon advising that an ongoing acute shortage of skilled trades people in the west will have the effect of capping the growth in starts.
“This is a very unique outcome and will see Western Australia remain out of cycle with the rest of the country,” Mr Reardon indicated.
Across the country, new home sales fell 7 per cent in November alone.
Mr Reardon is attributing the low volumes to rising interest rates as a constraining factor, with the problem set to persist into the new year.
He concluded: “This will see the volume of homes commencing construction continue to contract in 2024 resulting in the lowest number of new house commencements since 2012.”