Housing shortage predicted for Perth in next two years
A housing shortage is predicted for Perth in the next two years as building approvals for new dwellings is at the lowest it's been since 2001.
Shane Kempton, Chief Operations Officer for Professionals Real Estate Group in Western Australia and the Northern Territory said that Perth will begin to experience a housing shortage over the next two years due to an under supply of new homes being built.
With only 1,095 private sector dwellings being given building approval in Western Australia during March 2018, this is the lowest number of private sector dwellings given approval since March 2001, when 1,038 dwellings were approved.
“Over the past four years there has been a dramatic fall in the number of new dwellings being approved each month in Western Australia when they peaked at 3,258 during July 2014,” he said.
The undersupply of new dwellings has flow on effects to the rental market, with the median weekly rent in Perth rising for the first time in over five years during the March 2018 quarter by 1.4 per cent. As the rental market is a forward indicator of the overall property market, when rents begin to rise it’s generally a sign housing supply is tightening, according to Mr Kempton.
“There has been a major slowdown in new housing construction in Perth over the past four years due to a lack of consumer confidence and tighter lending requirement imposed by the banks.
“This lack of supply will become more apparent when the Western Australia economy gains more traction over the next two years,” he said.
With major investment planned for the resources sector including Chevron’s decision to proceed with the second stage of the multi-billion-dollar Gorgon project expansion, it will be interesting to see how the market will cope, said Mr Kempton.
“Kwinana has also been recently chosen as the site for a new lithium refinery that will create hundreds of new jobs in the area. Western Australia already produces one third of the world’s lithium supply and that is expected to rise sharply over the coming years.
“For property investors and first home buyers, now is a great time to get into the Perth property market before the supply of homes tightens and house prices start to rise over the next two years,” he said.
With property prices in Perth quite low, the overall market is in recovery mode which will only be further accelerated by the under supply of new dwellings. With a large selection of established properties for sale in prime locations that suit investors and first home buyers, Mr Kempton said now is the perfect time to buy property in Perth.
The news comes after data revealed first home buyers were more active than ever in Perth.
Source: The Real Estate Conversation