1. The Outlook for Residential Construction in the South West Dr. Harley Dale HIA Chief Economist HIA South West Industry Update Bunbury December 2012

2. The most comprehensive housing report card produced in Australia Spring 2012 edition:- The global outlook could be worse, but it’s not that good. Australia is in sound economic shape, but the devil is in the detail. The outlook for WA is indeed impressive, relative to other states (rivalled only by Queensland), though the state has had better. Residential construction is showing promise. For more information on the HIA Economics Group, please contact us at: (02) 6245 1393 or economics@hia.com.aueconomics@hia.com.au

3. HIA WA Outlook, Spring 2012 edition “Sentiment towards the global economy has soured … and so the perception is that global economic prospects have weakened.” The implications for interest rates:- “Against this backdrop, the Reserve Bank of Australia (RBA) cut interest rates by a further 25bps on October 2, taking the Official Cash Rate (OCR) to 3.25 per cent.” “We’re maintaining our view that 2012/13 will see a decent rebound of 25.1 per cent, followed by a year of consolidation in 2013/14 wherein starts are forecast to grow by a modest 5.0 per cent. This would leave the level of starts in WA at 23,024…” “… activity in the coming months will be crucial to this view materialising.”

4. ‘We’ll all muddle through’ seems to be the view

5. WA Economy – looking better than mid year

6. Economic growth is strong in WA, but…

7. … not everywhere

8. Interest rates back near historic lows 2012 has seen a total of 125bps of cuts to the official cash rate. However, households and businesses have not received all these cuts – there should still be more yet to come…

9. Hopefully to keep confidence more buoyant

10. The Western Australian Economy

11. Gross state product: not amazing, but still decent…

12. WA’s labour market

13. Residential construction in WA

14. Where we’ve come: WA’s housing starts

15. WA’s alterations and additions

16. South West home to Hotspots in 2010/11

17. Land sales and prices in the South West Land sales increased by 10% in the June 2012 qtr; by 17% in 2012H1.

18. WA approvals heading in the right direction…

19. …and across the Bunbury region

20. Selected South West areas

21. House and unit values – tracking sideways?

22. Mixed performance of prices in the South West

23. Improvements in WA’s affordability

24. Total renovations investment: sliding in WA…

25. … as in the Bunbury region

26. Alts and adds in selected South West areas

27. So what does the future hold?

28. Short term starts outlook

29. The outlook for renovations

30. Economic reform is the key

31. THANK YOU FOR YOUR TIME THIS MORNING Harley Dale HIA Chief Economist December 2012 http://economics.hia.com.au