If you only looked at Western Australia’s latest building activity figures, you’d be forgiven for thinking the housing shortage is finally on the path to being solved.
The June 2026 ABS Building Activity data shows dwelling commencements in WA surged to 7,240 homes, up more than 22% in a single quarter and more than 23% higher than a year ago. It’s one of the strongest results the state has recorded in years.
On paper, that’s exactly what policymakers, developers and aspiring homebuyers have been hoping to see.
But housing markets aren’t driven by what’s being started. They’re driven by what’s being completed.
For several years now, Western Australia has been trying to build its way out of a housing shortage. Demand has been fuelled by a strong economy, population growth, interstate migration and some of the tightest rental conditions in the country. The response from industry has been significant. More projects have been approved and builders have steadily increased activity.
Yet despite all of this, finding a home remains difficult because the pipeline is growing faster than homes are reaching the finish line.
The ABS data shows hundreds of thousands of dwellings remain under construction nationally. While commencements continue to climb, the industry is still working through a substantial backlog accumulated over recent years.
Western Australia’s lack of housing supply and builds failing to keep up with demand is one of the biggest pressure points in the country. Ray White data from earlier this year highlighted how WA had added 3.2 people to our population for every new house completed.
The ripple effects means that a home that takes an extra six or 12 months to complete is a home that isn’t available to rent, buy or occupy. Multiply that across thousands of dwellings and the market remains undersupplied, regardless of how many projects have broken ground.
This is where construction costs and material shortages become more than an industry issue. They become a housing market issue.
While the extreme cost escalation seen during the pandemic building boom has moderated, builders continue to operate in a far more expensive environment than they did only a few years ago. Labour remains difficult to source across many trades, material costs remain elevated, and the growing volume of work competing for resources means delays can quickly compound.
Our recent conversations with builders have seen some report only receiving 60% of the delivery of bricks they received last year, limiting their build capacity, with kilns in WA already operating at 100% capacity.
Projects commencing today are entering a construction environment where timelines remain stretched. Some developments will inevitably take longer than anticipated. Others may become less viable if costs continue to rise.
So, what happens if housing demand continues to accelerate while housing supply and completions continues to lag?
Persistent undersupply is likely to remain a source of support for prices and rents, even as higher interest rates, policy uncertainty and softer sentiment moderate the pace of growth.
What makes the current cycle particularly interesting is that supply isn’t absent. In fact, there’s a substantial amount of housing in the pipeline but much of that future supply remains trapped in the construction process.
A commenced dwelling may improve future supply, but it does nothing for today’s rental shortage. It does nothing for the family searching for a home this month. It does nothing for rental vacancy rates until the keys are handed over.
That’s why the latest ABS figures should be viewed as both encouraging as more homes are being started than we’ve seen for some time, and cautionary, because commencements alone won’t solve Western Australia’s housing challenges.
Until completions pick up meaningfully, the gap between demand and supply is likely to persist. In our view, that undersupply should continue to cushion Perth’s property market over the year ahead, even as softer sentiment moderates the pace of growth.
