Developers blame building costs and red tape as 10,000 WA apartments blocks stuck in the pipeline

Housing supply has been choked by sky-high project costs, with more than 10,000 approved apartments languishing in limbo across the State. New research commissioned by the Property Council WA shows more than 12,500 proposed apartments have received development approval since 2020. But construction has started on only 2140 of them. The council’s new Sky High report, developed with Bridge42 and supported by data from specialist consultancy Urbis, blames high construction costs and red tape for stalling the projects. Property Council WA executive director Nicola Brischetto said the State desperately needed more apartments and medium-density residential infill to ease the housing crisis for West Australians.” Last year, only 17,700 new abodes were built in WA, well below the 26,000 total annual requirement to meet Federal Government housing targets. The rental market also remains in dire straits with a 1.06 per cent vacancy rate in Perth, according to the Rea Group, well below the 3 per cent vacancy rate of a regular market. “There are currently 10,000 planned apartments with development approvals that are in limbo across Western Australia,” said Ms Brischetto. “Sky-high construction costs and government-related taxes, fees and charges are among the biggest barriers to having these apartments built. “Building affordable apartments is particularly challenging as the projects simply don’t stack up.” Ms Brischetto said there was no “silver bullet” to make the projects more financially viable but Property Council WA recommendations to help reduce costs includes fewer State and local government taxes, fees, and charges as well as short-term rebates and moratoriums. “Our recommendations include land tax rebates, expanding the eligibility of apartment transfer duty concessions and introducing relocation incentives for interstate residential construction workers,” she said. The State Government is set to soon announce a relocation allowance of $10,000 for east coast tradies moving west. “Driving down the overall cost of delivering apartments would be a game changer in easing WA’s housing crisis,” Ms Brischetto said. The report said the viability of infill developments had been severely affected by climbing, and highly volatile, construction costs, due in part to labour shortages and competition for labour from government and mining sectors. The report estimated cost hikes of more than 30 per cent since COVID hit. “Anecdotally, developers are reporting that construction estimates are now almost double the cost of similar developments five years ago,” said the report. Union bargaining and the implementation of the new National Construction Code will create further pressure. A doubling in infrastructure spending in the past five years had put substantial pressure on the supply of both materials and labour. “This particularly impacts large multi-residential developments where there is direct competition for the same skills and high volumes of materials like steel and concrete,” the report said.