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

2006 No.3 Western Australian Economic SummaryHouseholds and HousingDemographyWestern Australia’s rising population growth has contributed to strongdemand for housing, and has also supported growth in householdconsumption.Western Australia’s population grew by 0.4% in the June quarter 2006 to be2.0% higher than the June quarter 2005. The annual rise was the highestgrowth rate in all the states and territories. Overseas migration was the maindriver of population growth in Western Australia, contributing1.1 percentage points to the rise. Natural increase (births minus deaths)contributed 0.75 percentage points while interstate migration added0.15 percentage points to the increase.Housing MarketThe housing market is showing signs of moderating after three years ofstrong growth, although activity in both the established and new housingmarkets remains at historical highs.Table 1POPULATIONJune Quarter 2006% Change Over:Change: ChangeQuarter YearNSW 0.2 0.9Vic 0.3 1.4Qld 0.4 1.9WA 0.4 2.0SA 0.2 0.8Tas 0.1 0.7Aust 0.3 1.3Source: ABS Cat 3101.0Strong economic growth, population growth and the tight labour market(page 25) are contributing to housing demand, but this is being tempered bydeclining housing affordability caused by high prices and rising interestrates. Capacity constraints have meant that growth in the housing stock hasnot kept pace with strong demand growth. About a year’s supply of newhomes is currently under construction, a result of building commencementsoutpacing completion rates in most quarters over the past few years.There are signs that some of the heat in the housing market is dissipating.Building approvals are trending downwards, the backlog of residentialbuilding work appears to have peaked, and recently there has been anincrease in the stock of established houses for sale. Prices may rise for a fewmore quarters, but probably not at the high rates of growth experienced overthe past four years.Department of Treasury and Finance 5