Australia’s plan to build its way out of the housing shortage has hit another delay. Fresh national analysis shows the target of 1.2 million new homes, originally set for the middle of 2029, is now not expected to be reached until late 2030, a slip of around 18 months. For anyone who owns a home in Perth, or is thinking about buying or selling, this is worth understanding, because a supply shortage that keeps getting worse has real flow on effects for prices and rents.
Here is the plain English version.
Why the target keeps slipping
The National Housing Supply and Affordability Council points to a combination of pressures. Building completions are down around 4 per cent nationally over the past year, and Western Australia is one of the states going backwards, with completions down about 9 per cent. In other words, we are finishing fewer new homes here, not more.
Cost is the biggest culprit. House construction costs rose again in the June quarter and are now more than 50 per cent higher than they were before the pandemic. Add three recent interest rate rises, global cost pressures and a genuine shortage of tradespeople, and a lot of projects simply no longer stack up financially for developers. Master Builders Australia has also pointed to the federal changes to negative gearing and capital gains tax as discouraging new investment in housing.
There is one important nuance. Building approvals are actually improving, but an approval is not a finished home. Turning a plan into a completed house takes time, trades and confidence, and all three are in short supply right now.
What tighter supply means for Perth
This comes down to simple supply and demand. When fewer new homes are being built into a market with strong population growth, pressure stays on both prices and rents.
Perth is already one of the tightest markets in the country. Values have risen strongly over the past year and rents are still climbing at around 8 per cent annually. A worsening national shortage does not ease that pressure, it reinforces it. For existing owners, that scarcity is a big part of why Perth property has held its value so well while other capitals have softened.
If you are thinking of selling
A shortage of new stock means established, move in ready homes stay in demand. Well presented homes in sought after Perth suburbs continue to attract genuine buyers.
That said, buyers are more cautious now that rates are higher, so realistic pricing and strong presentation still matter. The shortage supports your position, but it does not remove the need to price to today’s market rather than last year’s peak.
If you are thinking of buying
Waiting for a wave of cheap new homes to arrive is a risky strategy when completions are actually falling. Meaningful new supply is years away at best, so competing for existing homes is likely to stay the reality for some time. Getting clear on your budget and finance early puts you in a much stronger position to act when the right home comes up.
My take
The headline sounds negative, but for existing Perth owners a structural housing shortage is a large part of why local property remains so resilient. Understand where your own home sits, plan and price sensibly, and you can make confident decisions regardless of the national noise.
If you would like to know exactly what your Perth home is worth in today’s market, I am always happy to help.
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Suresh Sama, Real Estate Consultant,
First National Real Estate RS Group
Call or text: 0452 512 396
Email: suresh@fnrsgroup.com.au