The latest Housing Industry Association (HIA) Outlook for Western Australia (WA) paints a compelling – and complex – picture of the state’s residential construction future. On the surface, things are moving: detached housing starts surged by 24.1% in the September 2024 quarter, with forecasts projecting sustained growth well into 2029. But dig a little deeper, and the numbers start to reveal a more imbalanced narrative.

The Rise of the Detached Home (and Fall of Everything Else)

WA’s housing growth is almost entirely driven by detached homes. Commencements are expected to rise from 17,520 in 2024/25 to over 20,600 per year by 2029. But that’s not balance – it’s over-reliance. The same report shows multi-unit starts – while up 88.5% from historical lows – remain far below where they need to be to address urban density goals or meet population demand.

In 2024, WA saw just 1,060 multi-unit dwelling starts in Q3 – a shadow of the national need. Even by 2028/29, projections barely cross 5,150 starts.

Why the Disparity?

Several factors are converging:

• Planning friction: Complex approvals, inflexible zoning, and Not In My Back Yard (NIMBY) resistance stall urban densification.
• Taxation pressure: State-imposed levies and developer contributions weigh disproportionately on high-density projects.
• Cost inputs: Construction costs, labour shortages, and material inflation are especially punitive for multi-storey builds.
• Regulatory drag: NCC 2022 compliance burdens are dampening investor appetite in the multi-unit sector.

Demand Isn’t the Problem — Supply Response Is

WA’s population continues to grow strongly. Net long-term migration remains significantly above pre-pandemic levels, and interstate migration into WA is outpacing most states. Yet the housing response – especially at the medium and high-density end – remains anemic.

Low unemployment and a return of investor confidence (due to tightening rental markets) have supported the detached housing surge. But this doesn’t address affordability, sustainability, or urban sprawl concerns.

Policy-Induced Bottlenecks

The WA outlook reflects a broader national issue: housing starts are no longer a simple economic cycle. They’re a policy feedback loop. Government interventions, both active and passive, are now the dominant factor determining what gets built.

Until state governments shift incentives, relax density constraints, and smooth approval pathways, the housing shortfall – especially in apartments – will deepen.

What Needs to Happen

1. Planning reform: Streamlined processes and incentivised density in well-located areas.
2. Tax relief or restructuring for multi-unit developments, especially for institutional investors.
3. Labour pipeline strategies: Vocational training, skilled migration, and prefabrication incentives.
4. Clearer alignment between population growth forecasts and housing delivery targets.

Final Word: The Long View

WA’s housing engine is humming – but only in one gear. Detached starts can’t carry the market indefinitely. With affordability crunching households and renters facing double-digit increases, density is no longer optional – it’s essential.

The path forward lies in embracing a balanced, policy-aligned housing strategy that serves population growth, environmental goals, and livability.

Because building more homes isn’t the issue.

Building the right homes, in the right places, is.