WA and Perth Housing: Approvals drop in WA as HIA says housing shortage has worsened over recent years

WA’s struggle against the chronic housing shortage has been dealt another blow, with new data showing the State sustained the biggest fall in new home approvals in the country. WA saw a 2.5 per cent drop in approvals in the three months to September compared with the same period last year, according to the Australian Bureau of Statistics. It bucked the national trend of an average 7.9 per cent hike in new home approvals over the quarter, which the Housing Industry Association credited partly on the falling cash rate. HIA senior economist Tom Devitt said WA’s housing shortage was getting worse. “Over the last three years, WA’s population has increased by over 250,000 people, but only 56,000 new homes were completed,” Mr Devitt said. “250,000 people would probably require an additional 125,000 homes (if there were two people per household). “Population growth is likely to be smaller over the next few years compared to the last few, but it does point to WA having fallen further behind its housing needs.” Mr Devitt said the major impediment to new supply in WA was the State’s acute labour shortage, which was preventing the local sector from engaging in high density apartment projects. “Labour constraints are arguably more binding in WA than anywhere else in the country,” he said. “It’s likely to be an ongoing challenge . . . as there is an ongoing pipeline of work and renovations all competing for skilled trades over the medium to long term.” Mr Devitt said the ABS data showed only 84 multi-unit dwellings were approved in WA in the September quarter, which was down from 257 in the previous quarter and the lowest number since July 2023. Monthly approvals have fallen below 100 units or apartments in WA only a dozen times since mid-1983. Mr Devitt said high-density buildings were harder to get off the ground during a labour shortage because the projects had big workforce requirements — sometimes for several years. However, the ABS data showed that WA continued to enjoy increases in approvals for new houses over the September quarter. The data showed that 1664 houses were given the green light over the three months — a 5 per cent increase on the 1584 approvals in the previous quarter. Mr Devitt said home building activity in WA had been ramping up over the longer term, with 22,700 new home commencements in 2024-25 compared with 13,600 in 2019-20. “But based on recent population growth and WA’s share of the national 1.2 million homes target, WA needs to be building an estimated 26,400 homes per year,” he said. “Our forecasts have WA reaching these sorts of build volumes towards the end of the decade. “(B)ut that reinforces just how much the State has been undershooting its housing requirements up to that point — which is why affordability has deteriorated so much.” Mr Devitt said affordability would continue to worsen, with units costs set to increase. HIA research shows Perth’s unit price are up 26.2 per cent over the year, but over the decade, they have had the most modest increase of all capitals, with a boost of just 52.1 per cent. Mr Davitt said the rising cost of land would affect the price of house and land packages. Median lot prices are now worth $375,000 in Greater Perth, compared with $250,000 in 2015. He said more construction workers and a plentiful supply of shovel-ready land would help boost housing supply. But he said lower interest rates alone would not be sufficient to hit targets, especially with recent inflation data suggesting the cash rate would be on hold until at least next year.