Perth's land supply pipeline under pressure
Western Australia's housing supply shortage was front-page news again last weekend, following a presentation at UDIA WA's industry luncheon focused on the greenfield land market in Perth.
Research4 Director Colin Keane delivered an update on the state of Perth's greenfield land market on June 20. His presentation outlined how Perth's new land supply pipeline was under significant pressure, with only about four years' worth of new stock coming through the pipeline in areas such as the south-east and north-east metropolitan corridors.
While population growth continues to moderate in WA, there are indicators that demand for new land will remain strong, with Mr Keane's projections indicating an average requirement of about 725 new lots per month over the next two years to meet forecast demand.
However, stock levels remain low with around 1400 lots – or two months of stock based on current demand – now on hand across active estates in the Perth metropolitan area.
Looking ahead, the capacity of new land developments to meet ongoing demand is declining, with just eight new estates coming online per quarter compared with the long-running average of nine new estates.
Not only is the number of new estates coming online declining but the size of those estates is also significantly smaller. According to Mr Keane's figures, the typical new estate now consists of – on average – just 154 lots, which is 60 per cent smaller than the long-term average of 387 lots since 2008.
With significantly less new lots coming on stream, competition from buyers will be strong and this is likely to put upward pressure on prices, adversely impacting affordability.
Many of the large masterplanned communities we have seen in the past are reaching the end of their lifespan, meaning they will be closing out their books, and there is not a lot of new large-scale greenfield development taking their place.
The trend in declining estate capacity highlights the increasing challenges faced by developers in bringing new land to the market.
These challenges include infrastructure capacity, environmental constraints and land ownership fragmentation.
Mr Keane rightly pointed out relying solely on the amount of urban zoned land, which has been earmarked under the State Government's planning frameworks as a measure of future land supply, overlooks the significant barriers to new development.
UDIA WA has long highlighted these concerns, including through the
UDIA National Housing Pipeline
annual report.
We continue to call for a more nuanced understanding of supply, which considers not just zoning but also market-ready projects and the real-world capacity of developers to deliver land to market.
Now more than ever, accurate data and proactive policy are critical to delivering the housing we need faster.
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