Western Australia pivots to higher density housing amid economic uncertainty
The WA Government has instigated a shift towards incentivising higher density living but is it too little too late when it comes to combatting the housing crisis?
Western Australia’s economy may be showing signs of a cool-down, but the State Government is betting big on housing in an effort to tackle the state’s affordability challenge.
The 2025-26 State Budget, announced earlier this month, delivers a $1.4 billion plan to boost housing supply, with apartments and townhouses front and centre.
As property prices continue to rise and the rental market remains tight, the state government’s pivot towards medium and high-density living sends a clear signal.
But is this an overdue step toward long-term reform, or merely a Band-Aid solution that comes too little, too late?
Affordability on the agenda
Housing affordability has earned a permanent place in the national conversation, and Western Australia is no exception.
Despite Perth long being lauded as one of Australia’s most affordable capital cities, this gap has narrowed considerably in recent years.
Enter the new State Budget’s $210 million commitment to expand Keystart’s shared equity scheme, this time with a twist.
Introduced in 1989, Keystart is a government initiative established to provide low-deposit home loans to Western Australians struggling to get their foot in the door of home ownership.
The shared equity scheme allows buyers to get into their own home for as little as a 2 per cent deposit, with the Housing Authority co-owning a share of the home.
The new $210 million expansion delivers on an election promise from the Cook Government and will go directly toward the purchase of 1,000 new apartments and townhouses, opening doors for buyers priced out of standalone homes.
In a market where land is at a premium and urban sprawl creates infrastructure headaches, this focus on medium to high density housing could be a game-changer.
Apartments and townhouses typically come at a lower price point than detached homes and are quicker to build, a crucial point in a market facing labour shortages and material cost pressures.
Additionally, the budget promises $199 million to reduce stamp duty for first home buyers, lowering the barrier to entry for many struggling West Australians. A further $246 million has been earmarked for social and affordable housing, forming part of a broader goal to deliver over 5,800 homes, with 3,000 of these already built.
Political instability dampens WA economy
Western Australia’s economy has remained one of the strongest and most resilient in the country.
The state’s economy has been bolstered by the mineral and petroleum industries, with sales reaching $223 billion in 2024.
Iron ore accounted for a staggering $128 billion, the lion’s share of which was exported to China. But as cracks begin to appear in Western Australian iron ore plan, questions are being raised about just how long the state’s economic momentum can last.
At the beginning of June, the Trump administration doubled its tariff rate on imported aluminium and steel from 25 per cent to 50 per cent, despite criticism from key trade partners.
The hike is set to put a dent in demand for steel from China, and in turn, dampen China’s appetite for Western Australia’s iron ore.
Meanwhile, geopolitical unrest in the Middle East adds another layer of volatility, contributing to forecasts that Western Australia’s growth in State Final Demand will halve in the coming year, set to grow by a more modest 2.5 per cent.
The political climate caused Premier Roger Cook to convene a snap summit in early June to address the state’s economic outlook, reiterating the government’s commitment to jobs, health and housing.
In a strategic pivot, the State Budget reallocated funds away from Metronet towards what it calls ‘economic infrastructure’, with $7 billion assigned to electricity poles and wires and a further $6 billion to water infrastructure.
The state is also doubling down on local manufacturing through the Made in WA initiative. The plan will subsidise production of power lines, batteries, buses and ferries, in a concerted effort to reduce reliance on global markets.
Housing reform the only way forward
In the face of economic uncertainty and export markets under threat, this latest State Budget signals a pivot inward as the State Government prioritises domestic resilience.
The $1.4 billion housing package, along with expanded support for first home buyers and low-income earners, is an attempt to reshape the state’s housing landscape and meet growing demand in the market.
In the short term, increased government intervention could provide some relief to those locked out of home ownership. Longer-term, the shift towards higher density living could mark the beginning of a rebalancing of WA’s housing market mix, moving away from detached housing.
If successful, this has the potential to future-proof Perth and its surrounds against population growth and further housing constraints.
For this strategy to work however, it will require coordinated planning from the State Government and genuine buy-in to higher density housing from the community, both of which still remains to be seen.
