The state is expected to record a 27 per cent uptick in home starts next financial year, but this won’t align with the population’s needs.
Housing starts in Western Australia are tipped to bounce back next year, but the state is expected to fall well below its requirements.
The Housing Industry Association’s latest economic outlook, released at an industry breakfast today, shows that 14,780 home starts are expected in WA this financial year, up 0.2 per cent on last year.
However, 21,410 home starts are expected in 2025-26, a 26.6 per cent increase on the prior financial year.
This falls well short of the 26,000 homes a year that represents WA’s share of the national target of 1.2 million new homes a year between 2024 and 2029.
The report stated that home completions have outpaced commencements in recent quarters, in stark contrast to the past few years when starts outweighed completions.
HIA stated that this will free up labour constraints.
In terms of apartment starts, the multi-unit sector in WA has “slowed to a creep”, the report stated.
“Multi-unit commencements in Western Australia were scarcely above 300 in each of the final two quarters of 2023,” the report stated. ‘
“This is in contrast to approximately 1,000 new units in a quarter in 2021.”
Source: HIA
HIA anticipates that the multi-unit sector will recover in the March and June quarter this year. This follows recent data from Urbis showing apartment supply is increasing.
“Construction cost escalation has finally come off the boil,” the report stated.
“Western Australia will increasingly respond to strong demand for new homes with units, as labour availability improves, from its current low volumes and in the lower density side of the market first.”
In 2024-25, a total of 3,240 unit commencements are expected in WA, compared with 4,240 the following financial year.
Nationally, HIA says the recovery in apartment commencements that had been predicted this year will not occur.
This is reflected in the fact that the volume of multi-unit commencements in 2023 was just 55 per cent of the volume in 2016.
“Ongoing capacity constraints and higher costs of construction will see projects delayed further,” the report read.
“For many this will require re-financing, and re-approval which will necessitate higher construction costs due to the changes to the National Construction Code, further delaying commencements.”
HIA predicted that rental prices would continue to see “extraordinary growth” and rental vacancy rates would continue to decline.
This comes as new data from REA Group’s Proptrack, released today, revealed that the share of properties listed for less than $400 a week had declined to just 5.4 per cent of the market in April 2024.
In 2020, more than half of all house rentals (57.7 per cent) and two thirds (66.2 per cent) of unit rentals in Perth were listed at less than $400 a week.
That share is now 4.5 per cent and 7.4 per cent, respectively.
