Booming population puts stress on Perth’s affordability status
A leading executive has revealed that strong population growth is keeping the pressure on Western Australia’s established home market.
Real Estate Institute of Western Australia (REIWA) chief executive Cath Hart highlighted that 73,000 people moved to the state in the year to June 2023, as cited by the Australian Bureau of Statistics.
“If you assume there are 2.5 people per household, that’s an additional 30,000 households in that time,” she pointed out.
On the flip side, Ms Hart noted that the state is only “building about 14,000 new homes per year”.
“We have a significant shortfall in supply versus demand.”
Compounding the problem is the fact that “earlier this year the National Housing Finance and Investment Corporation stated WA faced a shortfall of 25,200 new properties from 2023 to 2027,” the CEO continued.
“At current building completion and population growth rates, this is very likely to increase.”
The extremely strong migration is working twofold, putting upward pressure on property and rent prices, with Ms Hart outlining how “migrants generally look to the established homes market to either buy or rent when they first move to WA”.
She continued: “30,000 new households combined with local demand has seen house prices rise – up 8.2 per cent in the past 12 months and houses sell in a median of eight days.”
“You can also see the toll on the rental market where the median rent has risen 20 per cent in the past year. And while the vacancy rate remained stable at 0.7 per cent for November, this is a near record low and well below the 2.5–3.5 per cent you see in a balanced market.”
To provide some perspective, the CEO stressed that the vacancy rate has been below 1 per cent since August 2022.
The last time the state saw a vacancy rate above 2 per cent was in May 2020.
Looking forward, Ms Hart urged for the development of “a consistent pipeline of new housing”.
“There is definitely the demand for it, but a number of issues are slowing completions, from capacity in the building industry to infrastructure costs and supply, and even connection to the electricity system.
“In addition, while building approvals have risen slightly, they are still very low and this is a concern for the longer term,” she concluded.