Housing Perth’s changing needs

Building a new home in Western Australia can often present challenges, but the process has become more nuanced over the past three decades.

Land supply, planning complexities, environmental concerns and labour constraints have amplified hurdles faced by land developers in recent years.

Nevertheless, thousands of lots continue to be added to the market each year, as the metropolitan area expands to keep up with population growth.

In 1991, the state’s population was 1.59 million and the average lot size was about 700 square metres.

The average cost of a home was about $93,000, while the median weekly household income was about $560.

In 2023, WA’s population has risen to 2.66 million, while lot sizes are down to about 360sqm.

A new home in Perth will set you back about $572,837 and the weekly household income is about $1,815.

A block of land in Perth’s metropolitan area is going for about $227,000 today, whereas 30 years ago it cost about $42,500.

Changes

Among the major changes in the land development industry sector over the decades, Mr Lennon said the focus on environmental, cultural and sustainable issues had grown significantly.

“There is a big, big change emerging through the ’70s and ’80s [with] a lot more focus on environmental approvals,” he said.

“In today’s world [there is] a lot more understanding of cultural heritage, the whole scope of road planning has become more comprehensive. “

That’s really emerged through the ’60s and ’70s, so that was already well under way by the 1990s, but it [has an] ever-increasing focus.

“It’s still a much more controlled situation than it would have been even thirty years ago.” Mr Lennon said the increased complexity meant more resources were required to subdivide residential communities, but the main aim of creating communities remained the same throughout the company’s history.

“It takes a lot more staff [and] a lot more resources to bring on a new subdivision today than it ever did, because of the work that has to go into the various studies that have done the fundamental zoning, planning, environmental approvals [and] compliance,” he said.

Also, increased energy efficiency requirements heightened the workload of Peet’s workforce.

Mr Satterley said as well as block sizes decreasing, the layout of houses had changed considerably over the years.

“The houses now are better designed in the last 10 or 15 years, the dining room or sitting room has disappeared,” he said.

“The last 10 years you’ve seen the emergence, as designs have improved, of house sizes getting smaller, alfresco dining … and the learning from COVID is high ceilings, more window space and ventilation.”

As local governments impose more public open space requirements on land developers and lots get smaller, parks in residential estates have become more prominent over the years.

“The park has become the family room,” Mr Satterley said.

The state government’s infill target for Perth and Peel of 47 per cent by 2050 – with the population expected to hit 3.5 million – has encouraged more density in the state’s housing supply.

Urbis director property economics and market research, David Cresp, told Business News Perth’s demand for apartments grew in the 1990s as the population became more concentrated.

About 200 apartments were sold in Perth annually in 1992. By 1999, that number had risen to about 1,000.

“The Perth market demand for apartments grew through the 1990s and had a peak in 2006 when developers sold 1,643 apartments across Perth,” Mr Cresp said.

“Activity levels were subdued between 2007 and 2011 but really took off again with the mining boom activity in 2012 to 2015.

“The highest level of apartment sales by developers was recorded in 2014 with 2,822 sales, and this peak has still not been exceeded.”

In 1993, the median price for apartments sold by developers was $107,750, with Fini Group one of the largest apartment developers in Perth at the time.

Tony Lennon (left), Warwick Hemsley and Mandurah Syndicate Limited consultants Wayne Currey and Allen Blood, in 1994. 

House prices

WA’s boom-bust economy, linked to the cyclical nature of the resources sector, has resulted in fluctuations in the state’s median house prices.

In January 1993, Perth’s median house price was $101,039, compared with $559,971 in January this year, CoreLogic data shows.

Between 2003 and 2007, when the state was experiencing a mining boom, house prices were rising at more than 20 per cent per annum, and at one point were the highest in the country.

Today, Perth is the cheapest capital city after Darwin for its median house price.

CoreLogic research director Asia Pacific, Tim Lawless, said the economic fundamentals were strong for Perth’s housing market.

“Housing values [are] holding firm through the recent rate hiking cycle and reaching a new record high in April 2023,” he said.

“Rental markets are extremely tight, with a vacancy rate well below 1 per cent, which is pushing rents higher.”