Perth housing market: WA in the midst of home building slump
THE home building sector is in its worst slump in 20 years and a regulatory “enema” is desperately required to free up projects in the “constipated” planning approval phase.
That is the opinion of Master Builders WA executive director Michael McLean, after ABS figures showed new dwelling approvals in the private sector failed to reach 1000 for a fourth consecutive month in April.
Just 3809 dwellings were approved in the first four months of 2018, down from 4263 in the corresponding period last year and 7402 in 2014.
It is the worst such run since the beginning of 2001 — when there were about 700,000 fewer people living in WA — and without financial stimulus from the McGowan Government, Mr McLean does not see it ending unless mining activity and associated population growth begins ramping up.
Since peaking at about 2200 four years ago, monthly dwelling approvals have dwindled to the point where multiple builders, including big firms Cooper and Oxley and BCL Group, have collapsed since the start of year. Others have been forced to lay off staff and slice already thin margins to the bone to stay competitive.
Faced with a debt-burdened State Government wary of opening the cheque book, Mr McLean said proposed planning reforms seeking to cut red tape and better standardise development requirements and expectations across council boundaries were a low-cost initiative that could not come soon enough.
“The figures don’t lie in terms of the state of the market, it’s tough out there,” Mr McLean said.
“One of the most common complaints I hear from builders is over approval times.
“The sooner we can get some practical outcomes from the planning reforms the better because at the moment it is almost like some approvals are constipated with local authorities and we need a good enema to clear them out.”
Builder Rob Spadaccini, who owns three building companies servicing different price ranges, agreed the industry was at its lowest for nearly two decades.
“We are used to spikes and drops but this has been a steady gradual decline for about three years now,” he said.
Mr Spadaccini said there was still work around for reputable builders, especially in the high-end market, but echoed frustrations with drawn-out planning approvals.
“There is a lot in the pipeline at the top end but it seems like everyone from developers to councils to the WA Planning Commission is dragging their feet,” he said.
Mr McLean said the State Government’s decision to pull the plug on a $5000 boost to the $10,000 First Home Owners grant six months early last June could not have come at a worse time.
“People take time to take advantage of an opportunity like that and momentum was just starting to build when it was taken away,” he said.