Data released by the Australian Bureau of Statistics (ABS) on Wednesday shows West Australian residential building activity slumped to its lowest level in more than three years and continues to decline. As shown in the graph below, the total value of private residential building in WA fell sharply in the last year.
In March, 2011, the value of work was estimated at more than $1.6billion and work for March, 2012, was valued at $1.4billiion. According to the Housing Industry Association (HIA), the value of private residential building in WA has fallen 17.7 per cent in the last year, seasonally adjusted.
The data also shows a sharp downward trend has developed in the last three years.
Data included in the residential building statistics includes construction data on the number of dwelling units started each quarter. As shown in the graph below, the number of dwelling starts in WA also continued to fall. Since March, 2011, starts have dropped 2.6 per cent and have trended downward since 2010.
The HIA says the continuing slide of residential building and renovation work (which has contracted for three quarters) is a clear sign of recession in the Australian home building industry.
“As the residential building industry continues to contract, we are seeing real consequences for jobs, small businesses, the supply of new housing and rental costs. Governments can no longer ignore the negative impacts on employment, housing stress and Australia’s economy,” HIA’s Senior Economist Andrew Harvey said .
According to the ABS data, the Northern Territory was the only jurisdiction to record an increase in building activity in the last year which was 0.7 per cent. Fewer houses being constructed and an estimated 1000 people a week coming to WA has the potential to push house prices up and further reduce housing affordability. This would put greater pressure on the private rental market which has seen median rents in the month of June hit $450 per week (personal communication REIWA).
ABS building statistics are compiled using estimates from the quarterly Building Activity Survey which uses building approval details and returns collection from builders and organisations engaged in building activity. The statistics only relate to building activity which includes construction of new buildings and alterations and additions to existing buildings.