Filling the gaps in urban development

Aerial imagery of Perth and its urban sprawl would reveal vastly more open space than a similar view over London, despite the two cities having very similar geographic footprints.

Perth is about 80 per cent the size of the English capital but it has 11.6 million fewer people.

The Western Australian city’s spaciousness is part of its appeal, but planning bodies agree a balance needs to be struck between its population and the availability of housing choices.

In 2018, the state government outlined a planning framework to accommodate 3.5 million people in Perth and Peel by 2050.

A key part of this was for 47 per cent of new housing developments to be comprised of infill projects and 53 per cent on greenfield land by 2050.

While a lot of work has been done to increase Perth’s infill rate in recent years, development constraints have led to questions from industry players as to whether this target can be met.

Where we are

State government figures show residential infill development in Perth reached 44 per cent in 2020, up from 43 per cent the previous year and 32 per cent in 2011.

Planning Minister Rita Saffioti said the trend over the past decade showed the state was making good progress towards its target, despite infill levels fluctuating from year to year.

The WA Planning Commission’s most recent ‘Urban Monitor’ report stated that urban infill in Perth and Peel went from 41 per cent in 2016 to 42 per cent in 2017, and 38 per cent in 2018.

The report, released in March last year, said meeting infill targets would require: “Increasing the level of infill in existing urban areas and promoting greater dwelling density in greenfield developments.”

Ms Saffioti said the rate was likely to fluctuate in future as the residential construction sector moved through different cycles.

“We will continue working with local government and industry to deliver high-quality, well-designed infill development, particularly around activity centres and transport hubs,” she said.

Urban Development Institute of Australia WA chief executive Tanya Steinbeck said while most local governments were on track to meet infill targets, industry would prefer a more diverse housing mix.

“A significant portion of the infill product in many local government areas … delivered to date has been on battleaxe blocks or similar, rather than through larger projects such as apartments,” Ms Steinbeck told Business News.

“This has led to less-than-desirable outcomes in some areas, along with even further fragmentation of developable land in many local government areas.”

Apartment push

A recent Property Council of Australia report highlighted the severe impact skills shortages and supply chain issues were having on WA apartment developments during the pandemic.

It found that about 35 per cent of approved apartment projects had been shelved during COVID-19 and an additional $2.2 billion of pre-approved developments had been held back.

Property Council of Australia WA division executive director Sandra Brewer said this cast doubt over the construction of about 10,000 apartments in WA, which could add more pressure to housing affordability.

“Swift action is required to avert a future housing and affordability crisis,” she said.

“We have seen housing affordability erode over the last 12 months; the median house price within 10 kilometres of Perth’s CBD is now more than $1 million.”

Many developers have put larger projects on hold to focus on smaller boutique apartment projects, as they involve less risk.

Kylee Schoonens is a registered architect who runs Northbridge architecture firm Fratelle; she sits on the board of Landgate and has been on the DevelopmentWA and Metropolitan Redevelopment Authority boards.

Ms Schoonens said a risk-averse approach to development had led to a disproportionate amount of apartment projects built in more affluent suburbs, targeted at wealthier homeowners.

“It costs the same to construct an apartment in Claremont as it does in Midland, but the apartment end values are very different,” she said.

“Projects are more viable in areas that have high apartment end sales value, which is why it has been desirable for apartments generally to be developed through Perth’s inner ring: the western suburbs, along the coast, within established urban centres and close to the Perth CBD.

“To meet the demands and needs of a growing population, we need to provide diverse housing options across all Perth suburbs.”

Ms Schoonens said volatile construction prices meant apartment projects with marginal returns wouldn’t proceed, particularly in suburbs with lower sales values where affordable housing was needed most.

Housing stimulus

A flow of government stimulus to home builders during the pandemic has led to a surge in housing starts, with Housing Industry Association of WA figures showing a 74 per cent increase in dwelling commencements from 2019-20 to 2020-21.

Australian Apartment Advocacy founder Samantha Reece described the residential construction market as being inundated with an “avalanche of house and land packages”.

“The conversation should be about where are we going to accommodate more density,” Ms Reece said.

“We understand there are residents out there who don’t want apartments built next to them, but if they’re in a town centre or precinct they should realise there is a need for compromise.”

Infrastructure WA’s draft State Infrastructure Strategy, released in July 2021, stated that incentives to stimulate growth in the housing sector clashed with the government’s infill targets.

“Some current policy settings are out of step or, in some cases, in direct conflict with the state government’s urban consolidation agenda,” it read.

The report said that incentives to stimulate housing construction activity as part of WA’s COVID-19 recovery “fuelled a spike in single house construction in greenfield residential development”.

Ms Saffioti hit back at criticisms that policies including the $20,000 building bonus created an imbalance of houses over apartments.

“We refute this claim,” she said.

“The recent state budget included an extension to the transfer duty rebate for new residential units or apartments in a multi-tiered strata development for a further two years.”

Ms Saffioti also cited stamp duty transfer rebates of up to $50,000 for Western Australians buying off-the-plan apartments and pointed to recent apartment development approvals.

“We had a number of infill projects approved through the State Development Assessment Unit, including the Cockburn Gateway project and Parker 8 apartment complex in South Perth that is under construction,” she said.

Transport links WA’s infill targets largely revolve around Metronet, which the government describes as a catalyst to convert 8,000 hectares of land around new stations to desirable places to live and work.

Ms Saffioti said the project, to which it allocated $5.7 billion in the most recent state budget, included plans to develop 27 precincts in Perth’s urban fringe.

 “We are working across government on how we can bring forward developments in these precincts,” she said.

“We have precinct projects in inner-ring suburbs such as Bayswater, Redcliffe, Morley, and through the Town of Victoria Park and City of Canning.”

Opposition planning spokesperson Neil Thomson said the government needed to do more to ensure higherdensity development in the inner-ring suburbs, to meet infill targets.

“The state has been pouring billions of dollars into transport infrastructure, so you really would hope that it would also be doing the hard work necessary to activate and enable high-density development around that transport infrastructure,” he said.

“What I am concerned about is whilst we’re developing Metronet, which is servicing some of the outer suburbs with efficient rail, we’re not seeing enough effort [put] into these inner ring suburbs.”

Mr Thomson said opportunities for high-density residential development had not been realised in some of Perth’s inner-ring suburbs, including Innaloo and Ashfield.

“We could have significant development, if the right incentives are put in place,” he said.

Ms Schoonens said while she supported the government’s approach to unlocking land in Perth’s outer-ring corridors and creating future urban villages, more needed to be done to encourage development in these areas.

“It’s fantastic that these centres are being created, the next issue is encouraging private investment and development in the short to medium term into these areas,” she said.

“New developments will rely on a commercial approach to efficient, well-designed spaces and the types of housing product being delivered.”

Ms Schoonens said affordable housing, including build-to-rent developments or government leasing apartments from developers, might help unlock development opportunities in these areas.

Future landscape Mr Thomson said developers faced an uphill battle to deliver infill housing, due to difficulties securing suitable parcels of land. “

Because of the fragmented ownership, there’s difficulty getting hold of a piece of land in these precincts to actually do the development,” he said.

Mr Thomson said the government was taking a hands-off approach by allowing the development sector to cherry-pick through market-led proposals.

He said there needed to be more strategic planning around Perth’s transport nodes.

Ms Steinbeck agreed there were several barriers to medium- to high-density development, which led to UDIA’s push for a more coordinated approach around future housing supply.

“There are many challenges facing industry and all levels of government in terms of how we ensure future housing supply in a diverse range of areas given fragmented land holdings, ageing or insufficient infrastructure, along with community fears around new development in existing areas,” Ms Steinbeck said.

The UDIA has called for the creation of a Housing Supply Advisory Group, which would include representatives from government, industry and infrastructure agencies to ensure WA can maintain sufficient housing supply to meet market demand.