Wednesday’s Q3 Consumer Price Index (CPI) results from the Australian Bureau of Statistics (ABS) revealed that housing construction costs are out of control in Perth.
As illustrated in the following chart from CBA, new dwelling purchase costs in the CPI increased by 19.1% in the year to September in Perth, compared with just 2.7% annual growth in Sydney.
The surge in Perth dwelling construction costs comes amid rampaging demand, with Western Australia recording the nation’s strongest population growth over the past year, expanding by 3.1%.
This extreme population growth has driven Perth’s rental vacancy rate to only 0.5%, the lowest rate in the nation.
Perth has also experienced easily the strongest rental growth in the nation, up by 10.9% in the year to September.
Perth dwelling values have also increased by around 80% since the beginning of the pandemic in March 2020, the strongest growth in the nation.
To put it simply, Perth’s housing market has turned into a disaster, with demand running well ahead of supply.
The following chart summarises the underlying problem: Western Australia added 89,000 people over the most recent year versus dwelling construction of only 17,700.
The federal government’s high immigration policy, which is driving population into the state, is running way above construction levels, displacing Perth homebuyers and tenants.
