WA's critical housing supply shortage prompts quest for solutions

The peak body for property development in Western Australia says dire housing supply shortages and a lack of projects in the pipeline in the state necessitates urgent action.

Aerial photograph over the Iluka (Burns Beach, Ocean Reef, and Mullaloo) coastline in the northern suburbs of Perth.
Perth's suburban extremes have expanded rapidly but a critical shortage of new housing in the pipeline is threatening affordability. (Image source: Shutterstock.com)

Western Australia’s housing supply issues have reached a critical point.

For years now Perth has experienced record low rental vacancy rates and the stock of housing on the market has remained at extremely low levels.

According to recent Real Estate Institute of WA figures, median weekly rent in Perth has increased steadily to $545 per week and the median sale price for a house is now $542,000.

East coast counterparts might see those figures and wonder what the problem is given Perth remains the most affordable capital city in Australia. The problem is it is unlikely to stay that way in light of current trends.

You only need to speak to a property manager or real estate agent in Perth and they will tell you a very similar story – applicants offering up to hundreds of dollars more per week to secure a rental and homes selling before they even hit the market in some cases.

Of course, this ultimately has an impact on housing affordability and with interest rate rises causing many homeowners all sorts of pain, new means of getting the housing supply pipeline back on track must be formulated to keep a lid on housing affordability over the medium to longer term.

This is important for Western Australians trying to secure appropriate accommodation, but also to attract much needed skilled workers to the state to fill the growing number of job vacancies on offer across a range of industries.

While the State and Federal governments are looking at a range of measures to bring more housing to the market through initiatives such as the National Housing Accord and the state’s Housing Diversity Pipeline, there remains a lack of clarity across all stakeholders, around what the forward housing supply pipeline actually looks like.

To make real inroads into securing a forward pipeline of affordable housing, it is important to know exactly what we are working with.

Currently, there are varying methods used to decipher how much land is available in infill and greenfield areas in the Perth and Peel regions for future development.

The State Government’s Urban Growth Monitor (UGM) is one method, however, the methodology for the UGM does not consider the very real constraints to getting urban zoned and urban deferred land to the market and realising that land’s housing potential.

Ten-year housing supply plan

In response, UDIA WA recently launched its Development Ready Pipeline (DRP) pilot project in Perth last week.

The DRP pilot project is investigating what future housing supply is realistically viable to bring to market over the next ten years.

The pilot, which focuses on the Perth metropolitan area, has made preliminary findings in relation to Perth’s residential housing pipeline and identified where there are fundamental constraints to delivering much needed housing to the market.

The project is looking at all areas across Perth, including infill and greenfield areas, which are zoned for potential urban development.

Key findings from the initial pilot have revealed that approximately one quarter (24 per cent) of undeveloped urban zoned land in the Perth metro area is identified as being fundamentally constrained.

A further 18 per cent of all potential future urban land, such as land in planning investigation areas and zoned as urban deferred, is identified as fundamentally constrained.

It is important to understand that ‘fundamentally constrained’ means that land is effectively eliminated from the prospect of future development.

As part of the project, UDIA WA has calculated that equates to between 150,000 to 200,000 potential new homes that cannot be delivered to the market across Perth on either urban zoned or potential future urban land.

The fundamental constraints that have been identified are primarily in relation to environmental or infrastructure constraints, including Bush Forever sites, floodways, school sites, rail corridors, service infrastructure easements and major roads.

These are constraints that cannot necessarily be overcome, so other options need to be devised to deliver that shortfall of homes.

The State Government’s strategic plan for growth predicts Perth needs to accommodate 3.5 million people, which equates to 800,000 new homes in the next 30 to 50 years.

UDIA WA research is showing that targets are not going to be met unless a realistic approach to what housing can be delivered and where is determined and delivered.

In addition to the fundamentally constrained areas, the project has also identified a potential further 20 per cent of undeveloped urban zoned or potential future urban land that has ‘other’ types of constraints which will prove challenging to the delivery of new homes.

It is that 20 per cent with ‘other’ types of constraints where attention needs to be focused, as these ‘other’ constraints are more manageable if industry and government work together to look for shared solutions.

‘Other’ constraints include partial site coverage of remnant vegetation or State Forest, with additional challenges presented by fragmented land ownership, lack of service agency commitment or funding allocation for required infrastructure.

While UDIA WA is planning to interrogate the data from the pilot project even further, the peak development body has made several preliminary recommendations in relation to addressing those ‘other’ constraints.

Initial recommendations include:

  • Ensure a more collaborative and integrated approvals framework by re-establishing Planning’s leadership role in coordinating development outcomes and in resolving conflict across different government agencies.
  • Re-establish an Infrastructure Coordination Committee to better align growth servicing capital works programs with development pipeline intentions.
  • Develop a planning-led approach to environmental decision making.
  • Harness UDIA’s DRP Program to drive greater cohesion between industry and government agencies and reveal the true state of development-ready housing supply, forward dwelling yields and development constraints and challenges.

Now that the pilot project has been launched, UDIA WA will be taking further steps to finalise a more detailed report for the Perth Metro Area that includes further data interrogation and several more forums with key stakeholders across the different sub regions.

The aim is to assist with much needed coordination between approval and infrastructure agencies and help bring new housing to the market more efficiently and affordably.

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