Stuck in the sand: Perth’s got 2000 homes approved, but no one to build them

Despite a deepening national housing crisis, lagging housing construction has seen more than 37,000 dwellings in Australia remain approved but yet to start.

The latest analysis from KPMG Australia shows in Perth more than 1000 homes and 930 townhouses and apartments have been approved, but are yet to start. On the east coast, almost half of the approved but not yet commenced dwellings are accounted for by Sydney (30 per cent) and Melbourne (18 per cent).

WA’s housing crisis is set to be deep and long with no medium-term remedy in sight.Credit: Ross Swanborough

KPMG urban economist Terry Rawnsley said there was always a lag between housing being approved and construction commencing, but current estimates showed an abnormal number of dwellings sitting in this category, suggesting other market factors were stalling the pipeline of new builds.

“The number of approved but not yet commenced dwellings has been drifting lower over the past couple of years in Perth, but this isn’t surprising since there has also been a significant fall in approvals, so the pipeline is drying up,” he said.

“Perth was the only major capital city where the number of dwellings approved but not yet commenced was significantly below the trend of the past five years.

“However, construction prices have increased by 35 per cent compared to the average increase of 33 per cent for the six capital cities, indicating that the construction sector is feeling the impact of rising costs in Perth more acutely than in other capital cities.”

Rawnsley said Perth’s focus on detached housing allowed for more cost-saving measures compared to those typically available in large-scale apartment projects.

Housing Industry Association chief economist Tim Reardon said all skilled tradespeople were in high demand, from carpenters and plasterers to plumbers and electricians.

Reardon said the federal government had not yet added tradespeople to the priority list for migrant visas.

“This is a deep structural problem,” he said.

“There is a range of longer-term solutions, which does include the industry training more apprentices. But the industry would also like to be able to gain access to overseas skilled tradespeople.

“Any initiative to free up access to overseas labour will increase the capacity of the industry to build more homes.”

Rawnsley said despite the large number of stalled builds there were positive signs the backlog may soon ease.

“With housing prices now rising, strong population growth, and construction costs starting to stabilise, developers could be gaining more confidence to start housing projects,” he said.

The latest data from the Urban Development Institute of Australia shows that the number of lots on the market is the lowest since 2006, with just 617 available as of March 31.

The number of lots on the market is 34 per cent less than last quarter and a 70 per cent drop compared to the same time last year.

Summit Developments senior development consultant Adrian Johnson said as WA continued to grapple with a chronic housing shortage coupled with a critically low rental vacancy rate, people were turning their interest to property development to see how they can capitalise on the conditions of this unprecedented market.

“The current market conditions present a prime opportunity to look at doing a development,” he said.

“We are short more than 10,000 houses on the market and about 5,000 rentals. A development project not only puts you in a position to make money and get ahead, we are also addressing this supply issue at the same.”

The supply shortfall was expected to continue well into 2025 with a 30,000 shortfall in housing supply forecast over the next five years.

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