Western Australia’s housing market will continue to remain tight following the State Government’s decision to keep borders closed indefinitely.
The WA hard border with the rest of the country was due to be lifted on February 5, before Premier Mark McGowan changed his mind, leaving the border in place until further notice.
Real Estate Institute of Western Australia President Damian Collins said the WA market was struggling to keep up with demand for homes, with a skills shortage causing significant construction issues and building delays.
“The only way to get out of this shortage of homes all across WA is to build more houses,” Mr Collins said.
“To build more houses you need more skilled migrants, whether that‘s from interstate or international.
“House construction is taking double what it used to and that’s in large part due to the acute labour shortage and some of it the supply chain.”
Mr Collins said the current arrivals quota is going to cause negative long-term problems with housing across the state.
“We certainly need more people coming into the state and with the closed borders that’s very challenging to do,” he said.
“Internationally, we have a cap of 250 people per week, so you’ve got zero chance of getting international skilled migrants in and from the East Coast, it’s not a good look. People are fearful that they aren’t going to be able to come and go to see family.
“In the short-term, it might reduce pressure on the rental market, but there’s a price to pay because at some stage we aren’t going to have the skilled labour we need to build the houses we need in the next one, two and five years.”
Given the tight supply, Perth property prices have had a solid 12 months and Mr Collins said that is set to continue.
“Right now the Perth market is still very strong coming off very solid 2021,” he said.
“Domestically, we still have a lot of demand from owner-occupiers, mainly upgraders and first home buyers.
“The border delay is really just kicking things down the road, when the borders do open, we will certainly see more international and interstate investment in residential property.
“At the moment, local investors are still at a smaller percentage of the market than you would expect when vacancy rates are at a 40-year low.”
Mr Collins said investor activity in WA is still far below historical levels because of the hard border.
“It’s not stopping the market based on local demand, but when we do open the borders up I think that will return some confidence, especially in the second half of the year,” he said.
“I suspect we’ll see a return of investors which will give Perth another leg up.
“In the west, we still believe we have a lot to go with our recovery. Perth prices are only back to where they were in 2014. It’s the same with the rental market, which is the cheapest in the country based on income.
“Fundamentally, we are optimistic that 2022 will be a good year and it’ll be even better when borders open.”