A paradoxical and pressing challenge is gripping the Perth property market, where intense buyer demand for apartments is being thwarted by a rapidly shrinking pipeline of new developments.
This isn't due to a lack of developer interest but a stark economic reality: in many parts of the city, the cost to build a new apartment now exceeds its potential sale price. This fundamental lack of feasibility is halting the delivery of the very homes Perth desperately needs to house its growing population.
The Data Behind the Downturn
Recent figures from the Australian Bureau of Statistics (ABS) paint a clear picture of this worrying trend. For the year to September 2025, the ABS reported 4,187 approvals for dwellings excluding houses, such as apartments and townhouses.
This number is running approximately nine per cent below the pre-COVID-19 pandemic annual average of 4,586 recorded between 2016 and 2019. In a stark contrast, approvals for detached houses have surged, with 18,697 approvals in the year to September, a figure about 38 per cent above the pre-pandemic average of 13,556.
This growing disparity means fewer options are available for downsizers, investors, and first-home buyers, intensifying competition and putting upward pressure on prices in the established home market.
The Real Culprit: A People Problem
So, what is driving this crippling feasibility gap? The core issue is no longer the fluctuating global prices of materials like steel and timber. The primary bottleneck is now a severe shortage of skilled workers in Western Australia's residential construction sector.
According to the November 2025 WT Australian Construction Market Conditions Report, Perth is forecast to experience one of the nation's highest rates of building cost escalation in 2026, propelled almost entirely by rising local labour costs.
This is a direct legacy of the industry's downsizing after the last mining boom. The state simply does not have the workforce capacity to meet the demands of its revitalised economy, creating a two-speed market.
This dynamic funnels new development only into affluent coastal or riverside suburbs, where high sale prices can still absorb the inflated construction costs. Meanwhile, in the middle-ring suburbs where more affordable housing is most critically needed, new apartment projects have become commercially unviable.
A Call for a Fundamental Shift
Addressing this crisis requires a fundamental change in perspective. The solution lies in beginning to treat the skilled construction workforce as critical state infrastructure, akin to roads, ports, and rail lines.
A coordinated, long-term plan between government and industry to systematically train, attract, and retain talent is no longer just an option; it is a vital economic imperative. This strategic approach is the only way to ensure the state's broader economic success translates into a prosperous and liveable future where all Western Australians can secure an affordable place to call home.
