Many People in Perth Can't Afford Homes Anymore

By Newsroom | Housing, Perth |

Western Australia is facing a significant housing crisis, with a substantial increase in the number of households finding their homes unaffordable. This situation is driven by a complex interplay of rapid population growth, insufficient housing supply, rising rents, and construction delays. The social fabric of Perth is being altered as people are pushed to the city's outskirts in search of more affordable living options.

A new report highlights that over 210,000 households in Western Australia now consider their housing unaffordable, representing a 91% increase in just two years. This marks a dramatic shift, with more than half of all households in the state facing this challenge.

Growing Pressure on Housing Affordability

Recent data and reports reveal the worsening state of housing affordability in Western Australia. The core issue stems from demand outstripping supply, exacerbated by a growing population and a lag in new housing construction.

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  • Household Affordability Declines: Reports indicate a steep rise in the percentage of households considering their housing unaffordable. This has doubled in two years, pushing many residents to seek housing further from the city center.

  • Rental Market Strain: Renters are particularly affected, with only 39% of Western Australian renters deeming their housing affordable. This mirrors the sentiment among mortgage holders, where only 48% feel their housing costs are manageable.

  • Social Housing Waitlist: The strain is evident in the growing waitlist for social housing, which has increased by over a third in five years, reaching approximately 20,700 households.

Factors Contributing to the Crisis

The current housing situation in Perth is a result of several interconnected factors that have built up over time.

  • Population Growth: Rapid population growth is a key driver, increasing the demand for housing.

  • Sluggish Housing Supply: The rate at which new homes are being built has not kept pace with this demand.

  • This shortage is significant, with fewer than 3,000 properties available for rent at times, far below the estimated 13,500 needed for a balanced market.

  • Construction Delays and Cost Pressures: Issues such as construction delays and rising costs for developers, including financing conditions that may restrict smaller builders, further limit the addition of new housing stock.

  • Economic Shifts: Changes in demand and supply dynamics are also affecting the market, leading to increased rents and impacting rental yields for investors.

Differing Perspectives on Solutions

While the severity of the housing crisis is widely acknowledged, there are differing views on the primary causes and the most effective solutions.

Government Response and Criticism

  • Investment Claims: The Western Australian government points to substantial investments in social and affordable housing, alongside homeless programs, totaling $6.3 billion since 2021.

  • Criticism of Inaction: Critics argue that the government is not doing enough to address the worsening crisis. Accusations include failure to deliver on housing supply promises and a reliance on an immigration policy that increases demand beyond the market's capacity.

  • Calls have been made for urgent action, including boosting construction and cutting red tape to alleviate the rental crisis.

Recommendations for Improvement

A comprehensive report has put forth numerous recommendations to tackle housing affordability.

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  • Immediate Actions: Suggestions include expanding rental assistance, making rent relief programs permanent, and strengthening homelessness services.

  • Longer-Term Strategies: Broader approaches involve improving housing supply and addressing construction challenges.

  • The location of new housing developments is also a consideration, with varying infrastructure costs depending on whether housing is built in established areas, greenfield sites, or growth zones.

Market Dynamics and Investor Outlook

The rental market in Perth, despite the affordability crisis for residents, remains attractive to landlords due to consistently low property listings and strong rental returns.

  • Low Vacancy Rates: Property listings have been significantly lower than typical levels, often ranging between 3,000 and 5,000 available properties, indicating high demand.

  • Rental Yields: While property prices have risen, the stability in rent prices may lead to slightly declining yields for new market entrants. Investors are advised to stay competitive in pricing and property appeal.

  • Perception of Perth: Perth is no longer viewed as the low-cost capital it once was, reflecting the broader economic shifts impacting housing.

Expert Insights

Academics and researchers have emphasized the multifaceted nature of the housing crisis and its wide-ranging consequences.

Read More: Rents Go Up Faster Than Paychecks in Many Places

"The deepening housing affordability crisis is pushing people to the edges of Perth." - Professor Duncan, Bankwest Curtin Economics Centre (BCEC)

"Housing was no longer just an economic issue." - Professor Alan Duncan, Director, BCEC

"The standard of housing and health outcomes are linked." - Professor Steven Rowley, Australian Housing and Urban Research Institute – Curtin Research Centre

Conclusion and Implications

Western Australia's housing market is under severe strain, characterized by plummeting affordability and a critical shortage of supply. The data indicates a significant escalation in the number of households unable to afford their housing, impacting renters and homeowners alike.

  • Escalating Social Costs: The crisis is not solely an economic problem; it has profound social implications, reshaping communities and impacting well-being.

  • Urgent Need for Intervention: A multi-pronged approach is necessary, involving government intervention to support those in need, alongside strategies to increase housing supply and address construction barriers.

  • Future Outlook: Without decisive action to boost housing supply and implement supportive rental policies, the rental crisis is likely to deepen, further intensifying the financial and social pressures on Western Australian households.

Sources:

FTI Consulting's article, while relevant to Perth's housing market development costs, does not directly contribute to the analysis of the current affordability crisis or supply shortage as presented by the other sources.

Frequently Asked Questions

Q: Why are houses in Perth so expensive now?
There are not enough houses being built for all the people who want to live here. Also, more people are moving to Perth.
Q: Who is most affected by this problem?
Renters and people who want to buy a home are finding it hard to afford a place. Many families are moving to the edge of the city.
Q: What is being done to help?
The government has spent money on housing. Some people think more needs to be done quickly to build houses and help people with rent.