Building approvals in Western Australia have dropped to the lowest levels in 16 years, according to the latest figures from the Australian Bureau of Statistics, while a new housing affordability survey has labelled the Perth housing market ‘severely unaffordable’.
The ABS figures show there were 980 building approvals in WA in November, with February 2001 the last time approvals were lower at 912.
Peard Real Estate Group chief executive Peter Peard said there had been a steady decline in building approvals since March 2014, when 2,081 houses were given building approvals.
“There are fewer new houses being built in Western Australia mainly due to the collapse in the property investor market with investors now finding it very difficult to secure finance to build new housing stock as a result of new regulations being imposed by APRA on the big banks,” he said
“This tightening on lending finance (or credit squeeze) is expected to remain in place for considerable period of time which in turn will put a further brake on new housing construction in WA.
“The major decline in the construction of private sector houses in WA is positive news for the local property market as it will mean that the recovery in the property market will be faster than anticipated.”
Meanwhile, the latest Demographia International Housing Affordability Survey for 2017, which calculates cities’ affordability by using a house price to income ratio, has produced a median multiple of 5.9 for Perth, categorising the city as severely unaffordable.
Urban Development Institute of Australia WA chief executive Allison Hailes said the ranking was concerning.
“We cannot be complacent just because house prices have declined in recent years,” she said
“These latest results show that we have obviously still not addressed the underlying causes of our lack of affordability.
“Indeed as house prices declined, so did the state’s economic conditions, meaning that even more people are struggling to enter the housing market.”
Ms Hailes said some of the issues causing the unaffordability included inefficiencies in the land supply process, lack of support for housing diversity, poor infrastructure funding policy and current taxation policy.
In October last year, data from ratings agency Moody’s found Perth’s housing affordability was at its best level in 10 years.
