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PERTH, Jan 21 AAP

January 21 2013, 6:52PM

Housing is set to be a big issue in the coming West Australian election, with the opposition saying a fall in dwelling starts amid a rising population shows the government has failed to manage the boom.

While a report by equities trader CommSec on Monday ranked WA in first place for retail trade, equipment investment, completed construction work and population growth, it placed the state fifth for starting new home construction.

Overall, the report showed the state's economy was still in positive territory, opposition treasury spokesman Ben Wyatt said, but a rapid increase in home rental prices and a fall in housing approvals was concerning.

"When you get massive population growth and yet the government fails in respect of new housing, that ensures that Western Australians aren't getting benefit from our good economic times and are in fact being punished by the poor management of our boom by the Barnett government," Mr Wyatt told AAP.

"In 2012, we had 11,000 housing approvals and compare that to 2007/08 when we had 18,000.

"It's not sustainable and more Western Australians will end up having year-in, year-out increases in their rent by over 13 per cent, which is what we had in 2012."

Mr Wyatt said land releases needed to be sped up and made more efficient to help relieve WA's housing pressure.

Separately, Treasurer Troy Buswell said it was no surprise the CommSec report tipped the state to remain the nation's strongest through 2013, largely driven by high levels of business investment.

WA had far eclipsed other states and territories in equipment investment, while high migration rates pointed to confidence in its current economic conditions and future prospects, Mr Buswell said.

While WA is one of three Australian states - alongside NSW and Victoria - to hold a AAA credit rating with Standard & Poor's and Moody's Investors Service, the ratings agencies warned in December that the mining state was at risk of a downgrade because of high debt levels.

The Colin Barnett-led government warned in its Mid Year Economic Review last month that the state's books should slide into the red by $187 million in 2013/14 because of softer mining royalties.

It expects a surplus of $140 million for the current financial year, down from the budget estimate of $196 million, although prices for iron ore - WA's main revenue source - have since improved.