The Australian property boom has undergone a geographical shift from east to west, causing a housing crisis in Perth as buyers and renters compete for a limited supply of homes. Perth has emerged as the hottest selling market among state capitals, with homes staying on the market for a median of only 11 days, a figure significantly lower than the next fastest-selling state capital, Brisbane.
Buyers in Perth are experiencing a sense of urgency due to limited choices and negotiating power, creating a housing market skewed towards sellers. The tightness in the property market is also impacting renters, with Perth tenants entering their fourth consecutive year of historically low stock, resulting in increased rental prices. Perth currently has the tightest capital city rental market in the country, with vacancies at 0.4%, according to SQM Research.
Mandy Dehnel, Moneycare manager for Western Australia at The Salvation Army, highlighted the severity of the crisis, noting that even people with good incomes are struggling to find suitable housing. Overcrowded boarding situations and reluctance to complain out of fear of jeopardizing tenancy are becoming more common.
The tightness in the Perth property market is a result of subdued housing construction in previous years, leading to a supply and demand imbalance. This situation has been exacerbated by strong population growth and an expanding mining sector, including labor-intensive projects such as lithium mines.
Perth tenants are facing rent increases, with stories of a 20% hike shared by some. The housing crisis has broader health implications, as individuals delay medical and dental appointments due to financial constraints.
The state Labor government has recognized the severity of the situation and set up a new housing unit aimed at boosting supply. The government is also investing record amounts in social housing and homelessness measures. However, the impact of these initiatives remains to be seen, and the housing crisis in Perth persists.
While parts of Australia, particularly the east coast, have faced housing crunches for years, the intensity has shifted, with Perth now at the forefront. Rising mortgage rates, which are starting to have an impact, pose risks to property prices, and some cities, including Perth, Brisbane, and Adelaide, are expected to remain strong.
Investors, including those from the eastern states, are actively contributing to the property boom in Perth, further driving up prices. Property experts suggest that the undersupply of dwellings relative to population growth requires urgent measures, possibly including allowing homeowners to rent out rooms without negative tax consequences. The ongoing challenges in the property market underscore the need for comprehensive solutions to address housing affordability and supply issues in Perth.
Perth’s property boom is fueled by a confluence of factors, including a historical period of subdued price growth, strong population growth, and an expanding mining sector. These elements have contributed to a supply and demand imbalance, making Perth the hottest selling market among state capitals in Australia. However, this boom has resulted in a housing crisis, affecting both buyers and renters in the region.
Buyers in Perth are facing limited options and negotiating power, leading to a sense of urgency and swift home sales. The tight housing market has tilted the scales in favor of sellers, with homes listed for a median of only 11 days, significantly faster than other state capitals. This dynamic has left many potential buyers with little choice and the inability to negotiate effectively.
On the rental front, tenants in Perth are grappling with historically low stock levels, pushing rents higher. Perth currently has the tightest rental market among capital cities, with vacancies at a mere 0.4%. This has created intense competition among renters and contributed to a housing crisis where even individuals with good incomes struggle to find suitable housing. Reports of overcrowded boarding situations and reluctance to voice complaints out of fear of jeopardizing tenancy underscore the severity of the situation.
The Perth property market’s challenges are further compounded by rent increases, with some tenants facing substantial hikes, impacting their financial well-being. The crisis has extended to individuals delaying essential medical and dental appointments due to financial constraints.
Recognizing the urgency of the situation, the state Labor government has established a housing unit aimed at boosting supply. This initiative is scheduled to become operational this month, reflecting the significance of the housing crisis. Additionally, the government has committed record amounts to social housing and homelessness measures, signaling an effort to address the broader impact on the community.
Investor funds, including those from eastern states, are contributing to the property boom, further driving up prices. The current undersupply of dwellings relative to population growth has prompted calls for emergency measures, such as allowing homeowners to rent out rooms without negative tax consequences.
While some cities in Australia, particularly Sydney and Melbourne, are facing potential risks of a price pullback due to rising mortgage rates, Perth, Brisbane, and Adelaide are expected to remain strong. The ongoing challenges in Perth’s property market emphasize the need for a comprehensive and timely response to address housing affordability, supply, and rental concerns, ensuring a more balanced and sustainable housing landscape in the region.