- WA's housing market sees a 47.1% surge in sales despite a national downturn.
- Perth grapples with a severe housing crunch as demand outstrips supply.
- Efforts to address construction bottlenecks fall short as Perth's housing supply remains inadequate.
Western Australia’s (WA) housing market has continued its unabated upward momentum, in contrast to the other capitals, with sales growing by 47.1% in the three-month period to January 2024, when compared to the same time last year.
Home sales remain high, bucking national trends
While sales last month declined by 9.4%, the sales witnessed in the previous quarter of 2023 were higher than at the year’s start, illustrating a robust growth trend throughout the year.
Private house sales – Western Australia (seasonally adjusted)
WA’s detached home approvals were elevated towards the end of 2023, up 10.5% in the December Quarter compared to the September quarter, and by 11.3% compared to the same quarter in 2022.
However, approvals in 2023 were 12.2% below 2022’s numbers.
Construction is picking pace, but demand remains well ahead of supply
Housing Industry Association (HIA) executive director, Michael McGowan, commented that the data underscored the supply challenges Perth’s housing market has faced amidst substantial demand.
“The good news is that completion of homes is increasing, so we are working through the pipeline of projects under construction, and that new homes being started now are being built in a much quicker timeframe. This is helping get people into their new homes and will have some impact on rental availability as homes continue to be completed,” he said.
“Our big challenge is being able to build the 25,000 homes per year required to meet demand and deliver on government targets. WA currently has the capacity to build only 16,000 homes a year.”
Michael McGowan, HIA
“HIA is continuing to work closely with government on every means available to help build capacity, including increasing the skilled workforce through training new apprentices and increasing skilled migration, continuing to advocate for planning policy reform, and let builders get on with delivering homes without excessive and costly regulatory changes.”
Underlying issues affecting housing supply remain unaddressed
Resolve Property Solutions’ buyer’s agent, Peter Gavalas, lauded the State Government’s efforts to remove construction bottlenecks and improve supply through launching initiatives like the Builder’s Support Facility.
Nevertheless, he commented that more needs to be done to tackle the root causes of Perth’s housing crunch. Furthermore, he predicted that home prices and rents were likely to spiral further, to the detriment of Perth’s homebuyers and renters.
Perth weekly rents
“Perth’s property market is in dire straits.”
Peter Gavalas, Resolve Property Solutions
Perth weekly asking property prices
“The gap between the number of homes available and the number of people wanting them has never been wider, fuelling intense competition among buyers and driving up prices.”
The Real Estate Institute of Western Australia’s (REIWA) latest figures reported that listings in Perth plunged to new lows at the end of 2023, at 3,648, representing a 23.4% decrease from November, and a whopping 49.0% drop compared to the same time last year.
Perth total property listings
“Meanwhile, homes are flying off the market, with houses selling in just 10 days on average in December – nine days faster than the previous year,” Gavalas said.
Government doing a good job, but no quick fixes for Perth’s supply issue
A major factor underlying the housing crisis is the pace of WA’s population growth; the Australian Bureau of Statistics (ABS) reported 3.1% population growth in the year leading up to June 2023, the greatest growth rate nationally.
“This has far outstripped housing supply, which has been plagued with low completions and dwindling approvals.”
The Cook Government unveiled the Builders’ Support Facility last month to curb project delays, a $10 million loan facility supporting the completion of stalled WA home builds.
“This should give the construction industry a much-needed shot in the arm, so it’s definitely something that should be applauded. But while it should help wrap up stalled projects, it doesn’t do anything to kick-start fresh developments – so it’s like putting a band-aid on a deep wound.
“To bridge the ever-widening gap between supply and demand, Perth desperately needs new construction to keep pace with its burgeoning population. And to be fair, the government does recognise this.
“They’re working on streamlining planning processes and reducing unnecessary red tape – for instance, recently allowing homeowners to build granny flats in their backyards without lengthy council approvals.”
“But these reforms will take time to significantly impact housing supply. In the meantime, Perth’s property prices and rents are likely to continue rising, adding pressure to potential homebuyers and tenants.”
