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As building approvals hit a new low, there is fear that a housing shortage will occur within two years in a major capital city market.
Shane Kempton, CEO of Professionals Real Estate Group in Western Australia and the Northern Territory, is predicting that Perth will experience a housing shortage over the next two years.
Mr Kempton said that the shortage would be due to an undersupply of new homes being built, with only 1,095 private sector dwellings getting building approval in March 2018.
“This is the lowest monthly number of private sector dwellings given building approval since March 2001 when 1,038 dwellings were approved,” the CEO said.
Mr Kempton said that since the high in 2014, there has been a decline in approvals in the state.
“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,” Mr Kempton said.
The undersupply is being felt by the rental market, as median weekly rents have started to rise.
“This undersupply of new homes is now being felt in the rental market, with the median weekly rent in Perth rising for the first time in five years during the March 2018 quarter by 1.4 per cent,” the CEO said.
“The rental market is generally a forward indicator of the overall property market, and when rents start to rise, it is a sign that housing supply is beginning to tighten.”
Mr Kempton said that as investments in Western Australia take off, there will be a greater need for houses.
“This lack of supply will become more apparent when the Western Australia[n] economy gains more traction over the next two years.
“Property prices in Perth are now at rock bottom, but the overall market is now in recovery mode, which will be accelerated by this undersupply of new homes.
“Buying real estate is all about timing and now is a perfect time to buy property in Perth.”
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