Lot supply has plummeted in Perth as developers strive to keep up with ongoing demand for housing in the midst of Western Australia’s housing supply crisis.

The latest data from the Urban Development Institute of Australia (UDIA WA) shows that the number of lots on the market is the lowest since 2006, with just 617 lots available to the market as at 31 March 2024. 

The number of lots on the market is a 34.5% decline on last quarter and a 70% drop compared to the same time last year.

The drop in supply is coupled with a dramatic lift in demand, with UDIA WA’s data showing a 30% increase in the number of lots sold during the March 2024 quarter.  The increase in sales over the year was an astronomical 135%.

“The dramatic increase in sales numbers that is being experienced currently, is a reflection of the ongoing demand for housing in Perth,” UDIA WA CEO Tanya Steinbeck said. “WA’s strong economic conditions, growing population and relative affordability continue to attract a range of buyers to the market.”

“Perth, like cities across the country, is grappling with an acute housing supply shortage,” Ms Steinbeck said. “This is the result of years of systemic failure in strategic planning to ensure we have a sustainable forward pipeline of housing supply.”

Despite construction figures reflecting an increase in activity, Ms Steinbeck warned that the supply shortfall was expected to continue well into 2025 if more was not done to alleviate the challenges in getting housing to the market, faster.

“UDIA WA has forecast a 30,000 shortfall in housing supply over the next five years,” Ms Steinbeck said.

“Developers in greenfield areas simply cannot bring new development stages on fast enough to meet demand and this is now having a significant impact on prices with lot prices seeing a 15% increase over the last 12 month and 5.2% just in the first three months of 2024.” Ms Steinbeck said.

David Cresp, Director at Urbis commented that while lot sales have seen a substantial increase the shortage of lots that are currently completed means that many of these sales represent sales that will not settle for another six or nine months.

ABS data confirms that the number of new dwellings that have commenced construction each quarter has fallen since it peaked in 2021. This highlights that the building industry is still struggling to keep up with demand, but there is a strong pipeline of work ahead based on lot sales.

Investor demand remained strong in Q1 of 2024 and accounted for 32% sales.  However, this was a decrease from 2023 when 36% of sales were to investors.

“Much of this investor demand continued to come from the east coast, however my understanding is that many developers are now actively trying to limit the proportion of investors buying into their estates to ensure that they get a good mix of residents in the community,” Mr Cresp said.  

This quarter has seen an increase in first home buyers who accounted for 33% of sales, increasing from a low of 29% in Q4 of 2023.

“First home buyers are seeing rapid property price increases and therefore there is more urgency from first home buyers,” Mr Cresp said.  

“Additionally, the significant increases in established home prices are meaning that buying new is representing better value,” Mr Cresp said.

Ms Steinbeck said that while the industry welcomed the State Government’s focus on housing as a critical issue in recent times, more needed to be done to directly support the private industry in delivering more housing to the market.

“The private industry in WA delivers around 96% of homes to the market,” Ms Steinbeck said.

“While the recent State Budget had a focus on social and affordable housing, we must look at how we can deliver more housing right across the continuum from social and affordable housing through to rentals, first home buyer options, downsizer options and everything in between,” Ms Steinbeck said.

Roadblocks to getting more land to the market include lack of funding and coordination of essential infrastructure, and unnecessary red and green tape.

“Funding for key pieces of catalyst infrastructure to unlock the delivery of thousands of dwellings in appropriately zoned growth areas should be a top priority in order to bring an end to the housing supply crisis,” Ms Steinbeck said.

“Funding for essential infrastructure such as power, water and sewer must be committed now if we have any chance of addressing the forecast shortfall by more than a few thousand,” Ms Steinbeck said.

Ms Steinbeck also said a more holistic approach across government is needed to ensure supply is being delivered across the housing continuum.