The fact that there is a major slump in housing construction has been rejected by the Real Estate Institute of Western Australia (REIWA). The Housing Industry association is saying that there has been a big drop in the new housing approvals given. The drop is almost fourteen percent and it will further fall a twelve percent by 2010. The western Australian state will be short by almost thirty thousand homes by the end of the decade. Rob Druitt, president of the Real Estate Institute of Western Australia (REIWA) says that this fall represents a very temporary phase. The fall in the construction of new houses will not prolong for a very long time. During the boom period in 2005 and 2006 many houses were constructed. These constructions were much more than what was required. Now most of these houses have been taken. There has been a clearance of the stock that existed in many parts of the state.

Not all these excess houses have been taken by the consumer. It will surely take another twelve to eighteen months to clear that too. By then, one hopes that the housing industry would have improved for the better.  The rising interest rates could come down, this will build consumer confidence and industry will pick up. There will be more investment in the real estate as many will be confident to invest in a home for the first time.

The population growth and pressure on the rental market will fuel the need for new construction in the housing industry as all the new people will need accommodation. The abolition of the stamp duty and cut in taxes by the government can also play a very role in people deciding to buy a home for the very first time. Till that time all the excess houses that were built during the boom time will used to satisfy the demand for houses. In some of the established residential property market there is an over supply of houses at the present moment. That is one of the reasons why one sees a fall in the new housing permit.

It is true that permits are an indicator of future of the housing industry but an existing oversupply can bring a drop to the permits or approvals given. If the industry does not show signs of improvement then the slump is inevitable. If the government also does not do much to improve the situation then of course, the market will disintegrate. Then there will be an immense shortage of houses in the market. One hopes that there will be a slow but steady improvement in the market. This was voiced by the Rob Druitt, president of the Real Estate Institute of Western Australia.