Perth’s million-dollar market has expanded significantly, with 30 new suburbs joining the exclusive club in 2023-24. This surge has sparked discussions about various factors driving prices up, but the underlying issue is a significant imbalance between supply and demand.

Population growth in Western Australia has been substantial, with a 3.3% increase in the year to December 2023. This growth, driven by both interstate and overseas migration, has created a pressing need for housing. Assuming an average household size of 2.5 people, approximately 31,600 new households have required accommodation.

While migration has been a contributing factor, it’s essential to recognize that it’s not the sole cause of rising prices. The state’s economy relies on skilled workers to support various sectors, including healthcare, education, and small businesses.

The real issue lies in the shortage of new housing supply. Despite the increase in population, the number of private dwelling completions has fallen short of meeting demand. In the year to December, there were approximately 16,800 completions, resulting in a shortfall of about 15,000 homes. This is well below both the 15-year average of 22,000 and the 25,000 required under the National Housing Accord.

Addressing this supply issue requires a multifaceted approach. One key area for improvement is reducing bureaucratic hurdles. Streamlining the process of building new homes, particularly granny flats, would encourage more development. Additionally, exploring alternative housing options, such as demountable housing and medium-density developments, can help meet the diverse needs of the market.

Finally, increased government investment in social housing is crucial to support vulnerable members of society. While there has been progress in this area, ongoing commitment is essential to ensure everyone has access to affordable housing.

By addressing the underlying supply-and-demand imbalance, Perth can work towards a more sustainable and equitable housing market for all.