Western Australia’s housing market outshines amidst national slowdown

Despite a nationwide cooling in new home sales, Western Australia (WA) is witnessing an exceptional housing market trend, with a substantial increase in sales according to the latest HIA New Home Sales report. The report, which surveys the largest volume home builders across the main states, has indicated a significant upturn in WA, even as other areas grapple with downturns due to rate hikes.

Tim Reardon, the Chief Economist of the Housing Industry Association (HIA), highlighted the unique situation in WA. “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,” Mr. Reardon said. However, he pinpointed WA as an outlier, stating, “The only exception to this low volume of sales is in Western Australia where it appears that house building will defy the efforts of the Reserve Bank.”

This defiance comes after a low point in early 2023, leading to a remarkable 49.1% surge in sales in the three months leading up to November compared to the same period in the previous year. This surge is not only notable in sales, but also in a modest rise in approvals, which is expected to translate into a steady stream of new home starts for WA in 2024.

Unfortunately, this growth spurt could be hindered by an ongoing shortage of skilled tradespeople in WA. “The ongoing acute shortage of skilled tradespeople in Western Australia will cap the growth in starts,” Mr. Reardon noted, yet, he pointed out that “this is a very unique outcome and will see Western Australia remain out of cycle with the rest of the country.”

Nationally, the picture is less rosy. New home sales across Australia slipped by 7.0% in November, and the three-month figures up to November 2023 show a minute 0.1% decline from the previous year. The report illustrated varying impacts in different jurisdictions: South Australia (-26.1%), Victoria (-14.2%), and NSW (-9.4%) experienced declines, while Queensland saw a modest increase of 6.3%, and WA shone with a 49.1% hike.

Summing up the outlook for Australia’s housing market, Reardon remarked, “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.” However, it remains to be seen if WA’s market continues to buck the national trend and retains its resilience in the time ahead.