purchases of new homes increase in WA
Residents of Perth and Western Australia are seeing the value in new home building, according to the latest Housing Industry Association (HIA) report.
The sale of new homes has increased by 3 per cent across the country in October, but this is largely made up by a surge in the sale of newly built detached homes in Western Australia.
According to the HIA report from November 27, purchases of new free-standing homes in WA shot up 24.8 per cent. This is fantastic news for the local economy, especially those involved in the construction industry.
Perth builders will recognise that the country is experiencing a record year for new home starts. Chief Economist for the HIA Harley Dale noted 2014 will hold the highest number of dwelling commencements in Australia's history.
"The momentum culminating in this milestone has provided a substantial boost to Australia's economy at a crucial juncture in the cycle. Below trend economic growth and weak labour market outcomes would be considerably worse without the reach a new home building recovery is exerting into the broader economy," said Dr Dale in a November 23 statement.
While this is great news for the industry and the nation as a whole, it is important that this level of activity continues as housing construction in Australia is only now broaching the level it needs to be at to meet consumer demand.
The HIA noted that to sustain or improve the level of housing starts, policy reforms are needed.
"Record low borrowing costs have combined with other factors such as high net overseas migration to unleash substantial pent-up demand for new housing. These factors will keep the level of new homes commenced at historically elevated levels," said Dr Dale.
"However, what the economy needs is further growth in new home building over the next couple of years, but that will only occur as a consequence of taxation and regulatory reform."
The Reserve Bank of Australia indicated in its November 4 statement on monetary policy by Governor Glenn Stevens that it would not increase the cash rate any time soon, as the accommodative economic environment will continue to foster a sustainable growth for the entire country.
Mr Stevens noted in a November 18 statement that it could be possible with the right financial tools to maintain this period of growth for longer than would normally be expected.
"As for domestic sources of demand, an obvious contributor is the set of forces at work in the housing sector. Investment in new and existing dwellings is rising. It ought to be possible, if we are being sensible both on the demand management side and the supply side, for this to go further yet and, more importantly, for the level of activity to stay high for longer than the average cyclical experience," said Mr Stevens.
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