No. 3 - Department of Treasury - The Western Australian Government

Western Australian Economic Summary2006 No.3New Housing 1Dwelling commencements have risen for six consecutive quarters in trendterms, despite declining housing affordability. The number of buildingapprovals has trended downwards since the beginning of 2006, however,suggesting that the pace of growth in new construction may slow 2 .The seasonally adjusted number of building approvals in Western Australiadecreased by 15.0% in October 2006, following an increase of 7.3% inSeptember (revised upwards from 5.4%). In trend terms 3 , buildingapprovals have recorded eight consecutive monthly falls since March 2006(Figure 3).The number of finance commitments for the construction of dwellings andthe number of finance commitments for the purchase of new dwellings was5.0% lower in the three months to September 2006 1 than in thecorresponding period of 2005. This growth has slowed from three-monthlyrises of 12.7% in August 2006 and 19.9% in July 2006. Interest rate rises,strong price growth and land availability are all likely to have contributed tothis moderation in demand.Figure 3RESIDENTIAL BUILDING APPROVALSWestern Australia & Australia, Trend2500Western AustraliaAustralia25000200020000150015000100010000500500000Oct-91 Oct-96 Oct-01 Oct-06Western Australia (LHS) Australia (RHS)Source: ABS Cat. 8731.01 New housing comprises additions to the stock of dwellings from houses under construction ornewly built.2 Although part of this apparent discrepancy with the dwelling commencement datacould be explained by timing, as there is typically a delay between when approvalsare granted for the building of a new dwelling, and the start date for its actualconstruction commencement.3 As seasonally adjusted building approvals figures tend to be volatile, trend datatends to provide a better indication of conditions.6 Department of Treasury and Finance