Housing Shortage Fuelling Perth Construction Boom: Report

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Wednesday, November 13th, 2013
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Population growth, first-home buyer demand and a shortage of housing is behind the current boom in residential construction in Perth, a new report says.

Strong activity in residential construction throughout Western Australia is set to continue amid a massive shortage of available housing in Perth, the latest Housing Industry Forecasting Group (HIFG) report says, albeit with a surge in demand for tradespeople fuelling concerns about a shortage of skilled labour.

In its latest forecasts, the HIFG says the number of housing starts which took place throughout Western Australia surged 34 per cent in 2012/13 to come in at 24,100 – more than any other time over the past decade except for the period just before the global financial crisis.

Moreover, in the short term at least, the report says the good times are set to continue amid strong population growth, high levels of demand from first home buyers – a situation likely to be further accentuated by the recent boost to first home buyer incentives for new home purchases – and a massive shortage of housing in the state’s capital.

In 2013/14, the HIFG expects the number of starts (24,000) to remain near decade highs, albeit with dwelling unit commencement numbers expected to ease back to 22,500 in 2015/16 and remain at around the 20,000-22,000 mark in the two years thereafter.

house starts WA

Net dwelling starts and cumulative surplus/shortfall in WA, Perth and ROS

Underpinning much of this is a massive shortage of homes. While the rest of WA actually has a surplus of homes to the tune of 5,500 despite shortages in regions such as the Pilbara and Kimberley, the HIFG says Perth is suffering from a shortage of around 32,500.

Moreover, even with increased construction activity, the group does not believe this will be sufficient to meet new supply requirements and says the housing shortage throughout the capital city will rise to 43,000 by June 2017.

Moreover, the HIFG notes the boom in housing construction has seen a surging demand for tradespeople, fuelling fears of a shortage in skilled labour and upward pressure on costs.

Recent Master Builders Association data, it notes, shows advertised job vacancies and calls for sub-contractors have risen by 95 per cent in the September quarter compared with a year earlier. The main beneficiaries thus far have been starting trades such as landscaping, site preparation and bricklaying.

The latest forecasts come amid government efforts to reform planning and increase the number of housing options available to consumers.

Earlier this year, the government unveiled wide-ranging reforms including changes to Residential Design Codes, relaxing requirements for granny flats and easing approval requirements for subdivisions.

A second phase of the reforms, which was put out for public comment recently, aims to further streamline and simplify approval processes.

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