Metronet to connect with urban amenity
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The state government will leverage its Metronet program to drive development of urban density in Perth.
Housing Minister Peter Tinley wants the government’s flagship Metronet program, in conjunction with private sector developers and builders, to help make Perth one of the world’s most liveable cities within the next five years.
Using Metronet’s development, the government’s significant landholding and policy measures around the Keystart home loans and strata regulations, the government plans to help shape Perth for the future while ensuring steady stimulus for the housing sector.
The government will take a measured approach to development, conscious of residential market conditions as well as capacity for major works.
“There are only so many rail builders and class route road builders around, so there is going to be a constrained market as we go over the next three years,” Mr Tinley said.
“There are 18 Metronet sites, heritage and new, coming on between now and 2025, so that’s a significant amount of supply of crown land into a market that has just bumped along the bottom and starting to glide towards the housing industry forecast of 23,000 new starts. New house starts are at 19,000 now.
“Land is a great facilitator of development and opportunity. Land is a significant resource that government has a lot of, so we look at how we can facilitate housing choices by the strategic use of that land.”
Mr Tinley said the government was comfortable to lead development around Metronet sites and precincts, but would remain heavily reliant on the private sector through its cross subsidisation model to deliver the key desired outcomes, such as affordable housing.
“We feel government needs to be leading at a time in the cycle when private sector capital is a bit timid,” he said.
“Sometimes public capital has to be brave at a time when private sector capital is timid.
“We partner all the time with the private sector for the delivery of projects, of which 70 per cent will be sold at full price and we share in the profit of that, from which we will purchase the remaining 30 per cent of the project for social and affordable outcomes.”
Metronet was a central plank of WA Labor’s election pitch and it has since committed $3.6 billion through its budgeting process.
In May, the government said it would invest $394 million, in partnership with local industry, in social and affordable housing projects to create 1,390 homes as part of Metronet’s community hubs.
Mr Tinley said the government was ready to do business.
“We got a $394 million house-and-jobs package through (the budget process) to support the Metronet program, so we are comfortable with land, and with cash,” he said.
“It is very important that we get both the private sector and the public sector together to create those opportunities for the sort of things we are trying to do.
“I would like to see the liveability indexes position us as one of the top five cities around the world for liveability.
“I want to see us as the obvious international destination for businesses wanting to do activities into South-East Asia. That’s the prize. Three to five hours north of here by plane is going to be 60 per cent of the world’s consuming class.
“If we make this city internationally competitive, and liveable, companies from North America and Europe will naturally want to staff here to launch into the Asian opportunity represented in our time zone.
“We cannot let that opportunity go. That’s why Metronet is important. That is why affordable housing and liveable cities are important.”
Peter Tinley says each of the Metronet precincts represents a different prospect for developers. Photo: Cale Black
Mr Tinley said the government’s Metronet taskforce would be issuing regular updates and guidance to industry around coming opportunities for developers, but said near-target opportunities were predominantly around the Airport Link, currently under construction, the new stations at Forrestfield and Redcliffe, and the Bayswater station precinct that will be redeveloped.
In his roving commission as housing minister, he would also take a leading position in building a public consensus on what he calls ‘thoughtful density’ of housing, as well as discussion on housing affordability. Mr Tinley said Metronet’s greenfield and brownfield sites were not a case of one size fits all, and the government had to take a big-picture and long-term view of development.
Multiple state government departments and agencies have been working together, and in unison with local governments and industry, to develop precinct plans for areas affected by Metronet such as Bayswater, Redcliffe, Alkimos, Forrestfield and Subiaco.
“We are working together to make sure that, when we plan new precincts, we are looking at how we use that land and how we have that diverse housing choice that we all want in our community,” Mr Tinley said.
“For us, density is something that Western Australians have to get their heads around; it’s not about the box we live in, but the amenity of the placement in which we live.
“Too often in the private development market, and even at some local government level, they typically look at the proposal, the block number and what is being proposed for it, without having too much regard for a precinct-wide approach to it all.
“When it comes to brownfield developments it is even more important to think about who is going to live there and who you want to attract to those areas, and then create the place.
“If we do not talk about our people and how they will occupy this space before we talk about the boxes that we are going to design and build, then we are going to get poor outcomes.
“This is where government can do things where the private sector can’t, when they have a yield-only argument.”
Mr Tinley used the contrasting demographics of Forrestfield and Bayswater to illustrate the government’s proposed approach to placemaking and precinct building, and the benefits of government controlling land tenure to avoid development getting ahead of market demand.
“A Metronet site like Forrestfield, where the land assembly is difficult – you are not going to get a transport-oriented development like you see in Subiaco – and if you did any of that kind of density near the station like you might want to do, you would likely destroy value in the wider precinct,” Mr Tinley explained.
“The precinct design of place making in Forrestfield needs to take account of the localised economics of that area.
“One of our developer partners can’t produce (high-density housing) at a rate that the market can consume it, at the price point that I need it to be, when I can go 550 metres away and get a four by two (home).
“Where the land is relatively cheap the yield arguments change – the land assembly of the future is more important.”
The government could ensure affordable housing was developed now, but could also retain land and flexibility so it could increase density and diversity of product when the market had matured, he said.
“In 20 or 30 years from now, when we are looking at Forrestfield, the market meets a different requirement out there,” Mr Tinley told Business News
“We will still be able to be a leader on the ground because the Crown still has control of the land.”
At Bayswater, however, the market drivers were different.
“If you take Bayswater for example, the land we own there is 6,000 square metres, and with the potential to partner with local government on their land and then maybe some of the PTA car parks, we could have a couple of good sized parcels of land,” Mr Tinley said.
“But the cost of construction and to do justice to that site … you really have to make sure you get the yield out of it.”
The government is also investigating air rights above Metronet stations, to possibly facilitate future development.
“What we are doing now is preparing ourselves, and these precincts are setting the pre-conditions for shovel-ready projects, when the demand is available,” Mr Tinley said.
“You don’t want to be scratching around looking for it when the demand is coming at you.”
He said he had tasked the managers of the state’s successful Keystart Home Loans scheme, established in 1989 to provide low-deposit home loans to people unable to meet the deposit requirements from mainstream lenders, to investigate developing a Metronet-specific product.
The Keystart loan book was not currently suited to the typical, higher density product anticipated at Metronet infill sites.
“We have a $4.5 billion loan book with a 2 per cent deposit requirement,” Mr Tinley said.
“It takes an average couple 2.5 years to save for a Keystart loan, whereas it takes 11 years to save for a 20 per cent deposit.
“There are some things inside the way Keystart does its lending that doesn’t mean it is the most adaptable to multi-unit developments.
“We are working up policy options for a Keystart product to assist in demand and take-up of Metronet initiatives – so a Metronet product.”
The government is also pressing ahead with its strata reform legislation, with its Bill passed by the lower house last month and currently progressing through the Legislative Council.
Planning Minister Rita Saffioti told a Committee for Economic Development of Australia breakfast that the strata system needed to be updated to help create vibrant mixed-use precincts in the future.
“Strata reform is all about creating new opportunities and the ability to deliver more diverse housing choice and that is something again we are very keen to see – through things like community titles and leasehold schemes,” Ms Saffioti said.