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The Western Australian capital city is expected to see supply dry up with building approvals reaching their lowest point since 2001.
Shane Kempton, chief operations officer for Professionals Real Estate Group in Western Australia and the Northern Territory has claimed that will see rising prices due to a housing shortage between now and 2020.
Mr Kempton said March saw only 1,095 dwellings given building approval in Western Australia during March, nearly reaching the levels of approvals from 17 years ago, which saw 1,038 dwellings in March 2001.
“Over the past four years there has been a dramatic fall in the number of new dwellings being approved each month in Western Australia when they peaked at 3,258 during July 2014,” Mr Kempton said.
“This undersupply of new homes is now being felt in the rental market with the median weekly rent in Perth rising for the first time in 5 years during the March 2018 quarter by 1.4 per cent.
“The rental market is generally a forward indicator of the overall property market and when rents start to rise it is a sign that housing supply is beginning to tighten.”
This has been compounded by a four-year slowdown in new housing construction, which Mr Kempton attributes to weakening consumer confidence and tighter lending restrictions.
“This lack of supply will become more apparent when the Western Australia economy gains more traction over the next two years,” Mr Kempton said.
“For example, there is major new investment planned for the resources sector that includes Chevron's decision to proceed with the second stage of the multi-billion-dollar Gorgon project expansion.”
Another example to boost the Perth economy is the new lithium refinery being built in Kwinana, which has previously been described as having the potential to create a new boom.
“Kwinana has also been recently chosen as the site for a new lithium refinery that will create hundreds of new jobs in the area. Western Australia already produces one third of the world's lithium supply and that is expected to rise sharply over the coming years,” Mr Kempton said.
"For property investors ..., now is a great time to get into the Perth property market before the supply of homes tightens and house prices start to rise over the next two years.”
A house refers to a building or property used as living quarters or an individual’s place of permanent or temporary residence.