There has been no shortage of commentary throughout 2023 about the current state of housing markets across the country.
Western Australia, like most states in Australia, is experiencing an acute housing supply crisis that is making it harder than ever for people to get their foot on the residential property ladder or even find an affordable rental.
The last year has been characterised by stories of people unexpectedly finding themselves in a vulnerable position when it comes to their housing status, many experiencing homelessness for the first time.
As interest rates rise and the cost of living continues to escalate, now is not the time to take our eye off the ultimate goal of ensuring that all West Australians have access to a safe, secure, affordable roof over their head.
UDIA has been consistently advocating for a housing supply pipeline that is squarely focused on the efficient and affordable delivery of housing to the market and to supplement rental supply.
Importantly, we must focus on delivering housing across the continuum from crisis accommodation to affordable and social housing, right through to home ownership options.
Skills shortage challenge
The diversity of housing that is delivered to the market is also important in meeting the broad range of households that need accommodation. That means singles, couples, families, share houses, downsizers and everyone in between.
Building a diverse range of housing has many benefits, including meeting the needs of our current population, while also attracting a more diverse pool of skilled workers and talent to the state.
Being able to attract skilled workers to WA is critical to filling our growing skills gaps across a range of sectors, not least the property and construction industry.
The skills shortage has hit our sector hard over several years now and to deliver the homes we need; we must attract the people that can plan, design and build those homes. It is the ultimate chicken and egg conundrum.
Providing a diversity of housing, particularly in infill locations, also provides more affordable living options closer to activity centres and employment hubs such as the city, transit stations and other town centres and amenities.
Apartment projects stalling
The WA State Government has a vision for a more compact and connected city, setting infill targets under the Perth and Peel @ 3.5 million strategic planning frameworks for specific local government areas.
To achieve set infill targets, medium and high-density development in appropriate locations needs to be supported. This type of development, such as townhouses and medium to high-rise apartments, provides more options for buyers and renters as well as consolidating the city’s urban footprint.
In WA, apartment projects have stalled as the current context of high material and construction costs, coupled with skilled worker shortages and red tape, has made these projects difficult to make financially viable.
Rapid growth prompts a rethink on how to house Perth’s population
If Perth is to house its rapidly growing population and emerge from a housing crisis, it is going to need all the help it can get from YIMBYs, the infill development supporters saying ‘Yes, In My Back Yard’.
The State Government provided welcome support to assist the apartment sector in 2023, including the expansion of the off-the-plan duty concession scheme to include apartments under construction.
This is an important incentive for buyers because it provides significant transfer duty relief for people who purchase apartments in new developments.
The 50% land tax exemption for build-to-rent projects was also welcomed in last year’s State Budget, as it provides more of an incentive for private developers to consider build-to-rent projects, which are an important addition to the rental market.
A raft of new regulations for short-term rental accommodation in the state were introduced, including a new $10,000 incentive for property owners to transition existing short-term rental accommodation into long-term rental homes.
Another positive measure was the Infrastructure Development Fund, which was launched to assist with the cost of enabling infrastructure such as water, wastewater and electricity for eligible apartment projects.
While the fund is commendable, it has not had a significant impact due to the limited eligibility criteria and relatively low funding for what are expensive infrastructure works.
Developer incentives needed
Further to the measures in place, UDIA WA is seeking ongoing support for the apartment sector, primarily through additional changes to taxation settings.
In our upcoming State Budget submission, we will be seeking an expansion of the Infrastructure Development Fund to enable the delivery of more medium- and high-density residential projects.
We would also like to see the off-the-plan transfer duty concession made permanent, or at the very least, extended across the forward estimates to maximise the potential benefits that the concession provides in boosting consumer interest in apartments.
Something that we have been asking for since its inception, is the removal of the Foreign Buyers Surcharge that is putting a dampener on much needed overseas investment in the apartment market.
At a minimum, we would like to see the surcharge lifted for two years to allow more investment in the Perth apartment market and hopefully get more projects off the ground.
Overall, it is critically important that government and industry work collaboratively to enable the delivery of a greater diversity of housing to the WA market.
UDIA WA is looking forward to sharing our detailed State Budget Submission in the coming weeks that will recommend a range of measures needed to support the delivery of housing across the continuum.