Perth housing supply struggles to keep pace with population growth

Despite a recent increase in dwelling approvals, Perth’s housing supply remains insufficient to meet demand driven by strong population growth, according to local property expert Peter Gavalas.

Key points:

Dwelling approvals in Western Australia increased by 19.6% between April and May 2024, according to the Australian Bureau of Statistics (ABS).
However, Gavalas, a buyers agent at Resolve Property Solutions, says this growth is “coming off a low base” and unlikely to significantly impact property prices.
Western Australia recorded the largest population growth in Australia in 2023, up 3.3%, with Perth projected to grow at an annual rate of 1.4% over the next decade.
High construction costs, about 30% higher than pre-Covid levels, are pricing new builds out of reach for many buyers.
Total property listings in Perth were down 32.2% in June 2024, further intensifying competition among buyers.

Gavalas highlighted several factors contributing to the ongoing supply shortage:

“Population growth remains a key driver. Perth has seen significant population increases over the past few years, largely due to its relatively affordable cost of living and economic opportunities compared to other major Australian cities,” he said.

The expert also pointed to rising construction costs and a shortage of established homes for sale as factors exacerbating the supply issue.

Despite these challenges, Perth remains attractive to buyers due to its relative affordability compared to eastern capital cities. However, this sustained demand, coupled with slow supply growth, is likely to maintain upward pressure on prices.

“Even with more approvals, it would still take time before these properties were built, which means Perth’s supply shortage is unlikely to be solved anytime soon. For this reason, price growth in Perth is unlikely to flatten out in the near future,” Gavalas concluded.