Western Australia is experiencing a significant population boom, as highlighted by REIWA CEO Cath Hart. The influx of over 73,000 people to WA in the year leading up to June, as reported by the Australian Bureau of Statistics, is reshaping the housing landscape in our state. This blog post delves into the implications of this surge for the WA property market, particularly for established homes.
Population Growth and Housing Demand: The surge in WA's population translates to approximately 30,000 new households, assuming an average of 2.5 people per household. This surge is exerting pressure on the housing market, with a notable gap between supply and demand. WA is currently building around 14,000 new homes annually, which falls short of the rising demand. The National Housing Finance and Investment Corporation has projected a shortfall of 25,200 new properties from 2023 to 2027, a figure that could increase given the current trends.
Impact on Property and Rent Prices: With a large portion of migrants turning to the established homes market for purchasing or renting properties, we are witnessing a significant impact on prices. House prices in WA have risen by 8.2% in the past 12 months, and properties are selling rapidly, with a median time of just eight days on the market. The rental sector is also feeling the heat, with a 20% increase in median rent over the past year. Despite a stable vacancy rate of 0.7% in November, this figure is substantially lower than the 2.5 - 3.5% indicative of a balanced market.
Challenges in Meeting Housing Demand: The current scenario underscores the urgent need for a consistent pipeline of new housing to meet the burgeoning demand. However, several factors are hampering the speed of housing completions, including limited capacity in the building industry, infrastructural costs, supply chain issues, and challenges in connecting to the electricity system. Additionally, while there has been a slight uptick in building approvals, the numbers remain worryingly low, posing a long-term concern.
Conclusion: The population surge in WA presents both challenges and opportunities for the housing market. While the demand for new and established homes is robust, meeting this demand requires concerted efforts across various sectors. At Emerald Property Estate, we are committed to understanding these market dynamics and offering solutions that cater to the evolving needs of homebuyers and renters in WA.
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