3 days ago
Devastating effects of housing crisis leaves half a million West Aussie's struggling to pay rent or mortgage
About half a million West Australians view their housing as unaffordable — a figure that's nearly doubled in three years — as the State remains stuck in the grip of a crisis that will not end any time soon.
A new report out on Thursday claims that 210,000 households, which accounts for nearly 500,000 people, are now struggling with the mortgage or the rent.
That's 100,000 more households since 2022.
The Bankwest Curtin Economic Centre report says surging population growth, rising construction costs, and a shrinking rental market have combined to produce a perfect storm of affordability pressures.
And there is no respite in sight.
BCEC director Alan Duncan claims improved affordability could be up to 2½ years away, and even then it will only be achieved if immediate action is taken.
Professor Alan Duncan said the scale of the rental crisis was so bad it would go down in history.
'I do think, in some sense, that this housing crisis is one for the history books,' said Professor Duncan.
'From our findings we've seen a relentless growth in asking rents over the past 2 to 2½ years. We've never before seen an increase in rents to this degree or for this long,' he said.
The report highlights that a quarter of renters and half of all mortgage-holders are now finding housing costs unaffordable.
It blames WA's massive population growth and a failure to build enough properties — in the places where people want or need to live — as key reasons for the dire situation.
Only 694 new dwellings were added to Perth's private rental stock between March 2023 and September 2024, despite the population growing by 119,000 people over the same period.
That is equivalent to one home for every additional 171 people.
The BCEC report said there was currently a shortfall of 7,700 rentals, a shortage which has pushed rents up 76 per cent since 2020 to a median of $740 a week.
While rental vacancy rates are between 2 to 3 per cent according to various indices, many are not at the affordable end of the market.
The issue recently forced single mother Daniela Alves into a months-long search for a suitable and affordable rental.
The part-time worker said the price she paid to secure a roof over her and four-year-old son Lucas' head was not seeing family in Brazil, as there was no money left to save for a holiday.
After forking out for rent she said even a weekend away was out of the question.
For university student Willow Armitstead, 22, the current cost-of-living crisis meant moving out of her parents' home was simply not an option.
'I have multiple friends who are working three jobs and they can barely afford their own rent ... it's pretty tough at the moment,' she said.
The BCEC report said less than half of renters surveyed — only 44 per cent — believe they will ever own a house, with half of those citing affordability issues or hefty deposits as the main obstacle.
The struggle to enter the property market is evidenced by the share of first-homebuyer loans, which have declined from more than 35 per cent of all mortgages in 2020 to about 20 per cent by late 2024.
And with the report putting the median house price in Perth at $851,000, the price of homeownership has substantially outpaced wage growth in recent years.
But while the poor get poorer, the rich get richer, with loans to WA investors jumping from 15 per cent five years ago to 40 per cent in the September 2024 quarter.
University student Bridie Le Cormu, 19, summed up the grim outlook facing many young people when she said she could never expect to buy a place on her own.
'When I buy a property, it's definitely going to be down the track, and I want to buy a house with a friend or a sibling ... because I don't think (I can) on my own,' she said.
'Some of my friends who are older than me have been trying to look at houses and the competition is insane; they have enough money for a deposit, but then someone else will put $50,000 on top.'
The BCEC report found that even key workers like police officers, teachers and nurses had almost entirely been priced out of buying homes, with Armadale the only suburb affordable to all key workers.
It adds that the blow-out in construction times for new houses is partly to blame.
Local build times have more than doubled to 15.6 months in 2023-24, compared to seven months in 2018–19.
The delays have added a whopping $100,000 to the price of a typical new home in just four years.
While WA did break through the 20,000 barrier for new home builds for first time since 2017, it is still falling short of the 24,000 required annually under the National Accord target.
Prof Duncan said some of the key reforms needed to address the crisis include efforts to boost rental supply, and changes to stamp duty and negative gearing.
He acknowledged stamp duty was an important revenue stream for the State Government, but said it was preventing people from right-sizing into a home that suited their needs.
Boosting social housing to five per cent of total housing stock by 2040 would also address issues, he said.
He also called on the Federal Government to reconsider the benefits of negative gearing, as a means of helping to even the playing field.
'We talk about the housing crisis but it has been many years in the making, with many structural weaknesses' Prof Duncan said.
