The housing crisis will get worse before it gets better, with high development costs and low land supply delaying new apartment projects, according to one of the State’s leading developers.

Paul Blackburne said only luxury apartments in prime locations — like the ones developed by his company — are likely to get the green light over the next few years.

He said this was because only the high-end complexes are likely to achieve the necessary sales prices required to make major apartment projects viable amid the elevated costs of construction and finance.

However, developers in the high-end market face another challenge — a relatively low supply of appropriately zoned land.

“There is massive demand (for apartments) and it is increasing as people age,” he said.

“However there is so little land that has been opened up that is zoned as it should be, that this demand is unlikely to be able to be met in the coming decade.

“Years of lack of planning reform has led to a severe shortage of supply, especially of larger high-end apartments in areas of high demand and low supply.

“The State, Federal and local governments are now aware of this, however the long time periods needed to bring on new supply means the housing crisis . . . will get worse before it gets better.“

Mr Blackburne, who has $2 billion worth of developments in the pipeline, said the sector was also suffering from a 20-30 per cent jump in construction costs over the last two to three years.

While he forecasts construction prices will dip 5 per cent over the coming years, the costs are set to remain at elevated levels for years to come.

“Sales prices have no way to go but up as it is the only way for projects to become viable,” he said.

“(The Blackburne group) only selects iconic sites in areas of massive undersupply and high demand, so we are comfortable that we will proceed at some point with releasing more projects as and when the time is right.

“Many projects that may not be in prime areas of Perth — (where there is) limited supply and high demand — will most likely be placed on hold as they may not be viable.

“However we avoid those sites and those areas.”

Mr Blackburne, behind developments including OneSubiaco and The Grove in Claremont, said government needs to slash red tape to help mitigate costs.

“Tax incentives can be important but the main change needed is planning reform,” he said.

Mr Blackburne said the apartment market had only seen — and met — a small fraction of total demand from downsizing baby boomers.

“We have all heard this for five years now and everyone knew this wave of baby boomers wanting something newer, nicer and more appropriate was coming,” he said.

“We have only just started to see the beginning of this wave.”

For its own part, Blackburne will continue its long-running strategy of releasing one apartment complex per year, despite the growing demand.