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Western Australia has the nation’s top performing economy, so why can’t it solve the housing crisis?

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Mining royalties contribute significantly to WA's coffers. (ABC Goldfields: Jarrod Lucas)

"Western Australia has the strongest economy in the nation, the best set of finances in the nation, and the lowest unemployment in the nation," Treasurer Rita Saffioti declared on Friday.

Never one to miss an opportunity to spruik WA's envious economic position, Minister Saffioti — who is also the deputy premier — was quick to offer up all the highlights from Treasury's freshly-prepared pre-election budget and economic update.

Western Australia has the nation's top performing economy, so why can't it solve the housing crisis?

Rita Saffioti has been out spruiking the state's strong economic position. (ABC News: Courtney Withers )

But ask ordinary West Australians what they think of the state's economy and you'd probably get a different story.

Especially if you spoke with Kerry, who can't find a rental she can afford after she had to give up FIFO work to care for her sick son.

The reality of WA's housing crisis

Photo shows Rebecca Nickels and her sister Hannah looking at bills in their shared Maddington home.

Western Australia has the nation's top performing economy, so why can't it solve the housing crisis?

Rebecca Nickels is living in a house with nine other people. It is the reality for too many West Australians grappling with the housing crisis. So what are the politicians doing about it?

Or Rebecca, who is sharing a house with nine other people while waiting for social housing.

Or any of the roughly 16,000 West Australians who have asked homelessness services for help each year over the last five years.

Or the many more West Australians who need help but don't ask for it, or ask in different ways.

"We are the richest state in Australia and it's appalling that we have so many people that are really struggling. Nobody should be struggling," Kath Snell, head of advocacy organisation Shelter WA said this week.

So why are they?

It's more than just money

A key problem is that one of the biggest issues facing the state can't be solved with money alone.

This chart shows why.

That blue line shows how many homes and units started construction in that quarter and the red line shows how many were completed.

They follow a similar path until the pandemic hits — commencements spike, but completions flatline.

The reason is all about what those lines were showing a few years before. A contraction of WA's construction sector.

It meant there was little capacity to soak up all that extra demand when those well-intentioned stimulus efforts arrived in the early days of the pandemic.

Supply and demand disparity

Catching up on that work, and keeping up with new demand, makes things slow and expensive.

It hasn't been helped by builders going under, blaming contracts locking them into low prices as their costs went through the roof. 

Western Australia has the nation's top performing economy, so why can't it solve the housing crisis?

CEO of homelessness peak body Shelter WA, Kath Snell, doesn't believe people should be struggling in a rich state like WA. ( ABC News: Keane Bourke )

An influx of workers to the state, in part to fuel this latest mining boom, has added even more pressure.

"I think what we've seen is a government that's trying to play catch up after decades of under-investment, particularly into social housing," Ms Snell said.

What follows is a simple case of supply and demand: lots of people looking for houses and nowhere near enough means prices skyrocket.

In just two years, the median house and unit price for Perth is up 37 per cent, according to PropTrack.

The new faces of homelessness

It's contributed to a new cohort of people experiencing different forms of homelessness, like Kerry and Rebecca.

"The problem is often just an economic one, it's perhaps not really much more complex than that," CEO of St Patrick's Community Support Centre Michael Piu said this week.

The level of demand he's seeing at the moment is "unprecedented", and he's worried about the long-term effects — particularly on health — experiences of homelessness can bring.

But there's an opportunity for hope in what he's seeing too.

Western Australia has the nation's top performing economy, so why can't it solve the housing crisis?

Michael Piu says he is seeing unprecedented level of calls for assistance. (ABC News: Keane Bourke)

"Traditionally, the people that we've been working with, there's often a lot more complexity around their situation," Mr Piu explained.

"There might be … mental health challenges, there might be addiction, there might be family breakdown.

"That's not necessarily the case with some of the new faces of homelessness that we're seeing.

"So, can we step in and provide a rental subsidy to make sure that they can keep their home, and then we prevent them falling into homelessness, give them that breathing space to get back on their feet?

"That surely is a much more simple response than having to resort to interventions from the welfare system, the health system, potentially down the track the justice system."

'Game-changing investment' needed

Since the end of 2023, the WA government has funded a rent relief program — but advocates say there needs to be more.

And some help did come this week from the major parties, on top of promises they've made to improve the housing situation in the longer-term.

Western Australia has the nation's top performing economy, so why can't it solve the housing crisis?

Many new homes in Perth have taken years longer than expected to be completed.  (ABC News: James Carmody)

Labor pledged about $20 million to grow community housing organisations and fund better outreach, the Liberals would transfer properties to community housing providers, and the Nationals committed $10m to efforts in the regions, including better data collection.

The Greens promised to use any power they have to push for "using both carrots and sticks" to get short-term rentals back on the long-term market, end no grounds evictions and introduce minimum standards for rentals.

They are all changes which would help, but struggle to make progress on this issue quickly.

"I'd be the last person to advocate temporary, short-term solutions, but we need to be realists and we need to be thinking outside the square on how we can get families off the streets here and now," Mr Piu said.

"We've got an economy that's the envy of our nation and a budget balance sheet to match, and I totally appreciate government has achieved that through very careful balancing and allocation of resources.

"But … we're talking about the future of our state here. What could be better justification for a significant, game-changing investment into our homelessness system than the future of our children, the future of our state."

Green shoots emerge

There are some green shoots in the housing market.

The percentage of rentals sitting empty in Perth is 1.9 per cent according to REIWA — more than double where it's been for the last two years, and close to the 2.5 to 3.5 per cent you'd see in a balanced market.

Completions have been rising too, but a lot of catching-up remains.

Western Australia has the nation's top performing economy, so why can't it solve the housing crisis?

The city's rental squeeze has eased, but is still to return to levels seen in a balanced market. (ABC News: Gian De Poloni)

And the Housing Industry Association on Friday ranked WA as second highest on its Housing Policy Scoreboard, while recognising "further action is needed" on land releases and supporting infrastructure like roads and power connections.

But unless the major parties heed Mr Piu's calls to think outside the box about what short-term relief they can offer, plenty of West Australians will continue doing it tough for a long time still.

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