Could this be the largest home contruction boom Perth has ever encountered?
The ABS's latest data showed that new loans written for owner-occupiers for February 2021 increased to a new record of $2.5B. This represents a 32% increase on the last record achieved during the mining boom in 2014.
Most of this additional 32% increase has been due to loans for new homes constructions rather than existing dwellings.
The data confirm what is happening in the building industry at the moment. In the last couple of years, the total value of new home construction loans has been hovering around $200M a month. In January and February, this value increased to $729M and $790M a month. Nearly a 4x increase. In fact the momentum started from September 2020 a couple of months after government incentives were announced.
If this momentum continues, then this could become the largest home construction boom that Perth has ever encountered.
The long-term benefit is that the additional construction could help alleviate the current rental crises and housing shortages.
However, the increased demand for new home construction also means labour and material shortages, translating to increases in costs and delays - which are current news headlines.
This housing construction boom will also pump extra billions of dollars into the WA economy, further increasing employment and stimulating the economy - exactly what the government wanted to happen.
However, with the national HomeBuilder bonus ending in Mid April, these numbers could drop off quite rapidly and may even fall back to lower levels than before the government stimulus.
If you are looking to build, maybe wait 12 months for the current lot of construction projects to finish and for the industry to get back to "normal" levels. The last couple of months the industry has received 18 months worth of work in 6 months.
If you are currently building it may be wise to obtain a current rental and property appraisal. The property market has changed substantially in the last 3 months and this data could provide you with extra flexibility. If this is of interest please give me a call. I am always happy to help.