Australia

Hidden problem hitting property prices

Perth is staring down the barrel of a potential housing crisis as labour shortages hold up more than a third of the city’s approved apartment developments, a property expert has warned.

A new report by the Property Council of Australia has revealed more than a third of Perth’s approved apartment developments are on hold due to a skills shortage.

Another $2.2 billion of projects yet to receive approval are also being held up due to price escalations.

The report, compiled by 21 leading developers, estimates about 10,000 Perth apartments have been delayed and property prices were going up.

Camera IconA report from the Property Council of Australia has found critical development pipelines are being held up in Perth due to a skills shortage, which one expert says could cause a housing crisis if not solved. Credit: News Corp Australia

“Financial institutions require projects to have sufficient margins to cover contingencies and will not lend without this.”

Sandra Brewer, Property Council WA’s executive director, says Australia’s border closures due to Covid-19 are largely to blame for the lack of skilled workers.

“We are now faced with 150,000 less workers than we would have,” she told NCA NewsWire.

Ms Brewer said escalating construction costs were also driving a material shortage that affected builders.

She said it was “vital” to have medium density apartments to avoid a potential housing and affordability crisis in Perth.

“Despite positive policy announcements during the pandemic, like the WA Building Bonus and stamp duty rebates for apartments sold off-the-plan, years of undersupply and underinvestment have put pressure on house prices,” Ms Brewer said.

Judo Bank Economic Adviser Warren Hogan says the Australian economy is in “great shape”, given all it has had to withstand.

“As housing becomes more expensive, people move down the property ladder, escalating demand for social housing and puts more people at risk of homelessness.”

The Property Council’s report found Perth had a rental vacancy rate of 0.9 per cent and the median house price had gone up $40,000.

Sales data from May last year showed 20.27 per cent of investors were selling while only 5.56 per cent were buying.

It recommends driving more migration to Western Australia, removing a foreign buyer surcharge for skilled migrants and introducing an apprentice guarantee and payroll tax relief for small businesses to stave off future supply issues.

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