Perth's land supply crisis sparks urgent need to support infill development
Based on the average 20-year rate of development, land supply will run completely dry in the Perth metropolitan and Peel regions within the next 26 years.
As Perth’s population continues to grow and land supply tightens, concerns about housing supply and urban sprawl have remained at the forefront of the planning debate.
Nearly half of Perth’s suburbs could run out of land zoned for residential housing in as little as four years, according to data from Research4.
Perth’s north-east and south-west corridors are particularly vulnerable, while Perth’s south-east will be most resilient to expansion with up to 13 years of supply left in the pipeline.
With the rezoning process taking up to seven years, the need to rethink Perth’s housing plan for longevity has become more urgent than ever.
To experts, the key lies in creating smart and efficient urban infill processes. But with governmental red tape and community attitudes preventing many infill developments from going ahead, it’s not an easy solution.
According to the State Government, a reported 117,650 hectares of land in Perth’s metropolitan, Peel and Greater Bunbury regions were zoned for residential use at the end of 2023.
However, 77 per cent of this land has already been urbanised, leaving just a fraction of undeveloped land for Perth’s future.
Based on the average 20-year rate of development, land supply will run completely dry in the Perth metropolitan and Peel regions within the next 26 years.
If the government’s current infill and density targets are met, however, land supply has the potential to be stretched to another six decades, underscoring the importance of infill strategies in building Perth’s future.
The true cost of urban sprawl
It’s no secret that Perth takes the wooden spoon for having the worst urban sprawl problem in Australia.
With a city that stretches over 150km along our coastline, urban sprawl costs Western Australia an average of $2.5 billion a year.
A study lead by the Property Council of Australia estimates that the State Government could save up to $94.5 million for every 1,000 lots redeveloped in existing underutilised or declining urban areas, as compared to developing brand new greenfield land on our city’s fringe.
If Perth adopted an infill rate of 60 per cent, the government could save an estimated $23 billion by 2050. These savings would come not only from more efficient use of land, but by reducing demand on infrastructure and transportation.
With the 2025-26 State Budget already committing a significant $38 billion to our infrastructure pipeline, it raises the need to invest in improving existing infrastructure to support infill development, rather than further expanding Perth’s footprint.
Perth falling short of infill targets
Despite clear economic and planning benefits, Perth continues to fall short of infill targets.
The State Government’s Perth and Peel @3.5million plan aims to manage housing development more efficiently as the population approaches 3.5 million.
As part of the framework, the government has set a target of 47 per cent of new housing development to be delivered through urban infill.
However, current figures remain well below this threshold. In 2023, the net infill rate increased moderately from 31 per cent to 34 per cent, with only 4,860 infill dwellings constructed across the Perth metropolitan and Peel regions.
Three quarters of all infill dwellings constructed were single dwellings, and large-scale infill projects that yield over 50 dwellings per lot account for just 7 per cent.
Despite infill remaining one of the most powerful strategies to create walkable and connected communities, Perth continues to underutilise these opportunities to create multi-dwelling developments.
Support for developers the only way forward
Much of this underutilisation of infill opportunities stems from several barriers, all of which are making it increasingly difficult for developers to contribute meaningfully to Perth’s infill targets.
Rising construction costs are a major contributor, with apartments becoming more expensive to build and profit margins narrowing as a result.
Without sufficient government intervention through incentives, subsidies or streamlined planning and approvals processes, private developers have to take on significant risk to deliver medium to high-density projects.
Community attitudes are also a persistent strain, with the rise of the “Not in my backyard” (NIMBY) mindset preventing change in many existing suburbs.
According to MCG Quantity Surveyors’ NIMBY list, released in April, Perth’s affluent western suburbs such as Nedlands and Claremont remain most resistant to change.
In the inner-western suburb of Floreat, just 26 dwellings were approved last year, marking a minuscule 0.9 per cent increase in housing stock.
Development policy changes needed
With developers increasingly battling community resistance, making a meaningful change to housing stock with infill projects feels further out of reach.
Until there is a policy-level commitment to reshape these attitudes through education and community engagement and by putting developers at the centre of planning reform, Perth risks running out of room to grow and time to make any meaningful movement.
The State Government has recently committed to reviewing the Residential Design Codes with the aim of making it easier for medium density developments to be approved, marking a step in the right direction.
But much more is needed now, not tomorrow.
Streamlined approvals, clear planning processes and targeted infrastructure investment to support infill development are all crucial to give developers the backing to invest and deliver worthwhile change.
Perth and Australia’s housing strategy success depends on urban infill, and the success of infill depends on enabling those who are poised and ready to deliver it.
It’s time for change, not more discussion.
