Welcome back to the latest market update from the team here at Holdsworth Real Estate.

If you’ve been following the Western Australian property market recently, you’ll be well aware that housing affordability is becoming a growing challenge for many. The golden rule of real estate remains unchanged: the key to improving affordability is increasing supply. However, simply expanding our urban footprint with endless streets of traditional single residential dwellings is no longer the magic bullet.

Western Australia urgently needs more housing diversity. To sustainably accommodate our growing population, we must shift our focus toward high and medium-density stock—such as apartments, townhouses, and villas—in well-located, established areas.

The Missing Middle: The Growing Demand for Strata

At Holdsworth Real Estate, we believe strata housing has a critical role to play in addressing our state’s current housing shortage. The math makes sense: strata developments can deliver significantly more dwellings on a single parcel of available land compared to the traditional one-house-per-block approach. By maximising land use, developers can provide modern homes that are comparatively more affordable to both build and buy.

The demand for this type of living is surging. Over the last couple of years, Western Australia has experienced very strong price growth, which has naturally seen traditional detached houses become less affordable. As a result, we’re seeing a significant shift in buyer behaviour. There is a soaring demand for strata homes, particularly in high-amenity areas close to urban centres, public transport links, and popular lifestyle hubs.

This shift isn’t just driven by first-time buyers looking for an affordable entry point into the market. Strata properties are also essential for facilitating downsizing. Every week, our agents speak with local downsizers who want to stay in the community they know and love. Unfortunately, a severe lack of medium-density options is effectively locking them into large, high-maintenance family homes, which in turn chokes the supply of family homes available for up-and-comers.

Roadblocks to Medium-Density Development

Despite this clear demand, Western Australia is currently struggling to build enough strata housing to keep pace. In recent years, soaring construction costs have meant that, within the apartment sector, only luxury, high-end products have been financially viable for developers to pursue. Consequently, there has been a glaring shortage of new, genuinely affordable apartment projects hitting the market.

Compounding this issue are systemic constraints. Developers frequently face frustrating delays in securing building approvals at the local government level, alongside persistent challenges and red tape associated with essential power and water connections. These hurdles have heavily hampered the delivery of the medium-density housing our state so desperately needs.

Welcome Relief: The WA State Budget Steps In

Fortunately, there is a silver lining. Sweeping measures announced by the Cook Government ahead of the WA State Budget offer highly welcomed support for the local construction and strata housing sectors. Let’s break down the two major initiatives:

1. The $250 Million Pre-Sale Guarantee

One of the most significant financial barriers to any new multi-dwelling development is the strict pre-sale requirement imposed by lenders. Banks generally mandate that developers sell a high proportion of homes within a project off-the-plan before they will release construction funding. In a tight economic climate, this can significantly delay the commencement of construction, or worse, render vital projects completely unviable.

To tackle this head-on, the WA Government has introduced a massive $250 million Pre-sale Guarantee, designed to facilitate the delivery of up to 1,200 new apartments and townhouses. Under this scheme, Keystart will provide a guarantee to purchase up to 50 per cent of any unsold homes in an approved apartment development upon completion.

While developers are encouraged to sell these apartments on the open market as construction progresses (which causes the guarantee to lapse), having this safety net means projects can break ground much sooner. If the guarantee is ultimately called upon, Keystart will purchase the remaining homes at a minimum 10 per cent discount on market value in the Perth metropolitan area, and a 7.5 per cent discount in regional WA. The Government will then make these eligible apartments available to Keystart customers through the $210 million Urban Connect Shared Equity program, or allocate them to other vital State Government housing initiatives.

To ensure this directly aids affordability, developments utilizing this scheme must sell at least 30 per cent of the project’s homes at prices below Keystart’s property price limit, which is directly pegged to the REIWA median house sale price for Perth (with different criteria applying to regional areas).

2. Extension and Expansion of Off-the-Plan Concessions

For buyers, there is even more good news. The WA Government’s off-the-plan stamp duty concession scheme—initially launched to boost apartment construction and expanded last year to include townhouses—is being broadened once again. This year, these incredibly lucrative concessions will also apply to villas, units, duplexes, and triplexes within an approved strata scheme.

Better yet, the scheme, which was originally due to end on June 30, has been officially extended for another two years, and the eligibility thresholds have been generously increased:

  • Off-the-Plan Purchases: Absolutely no stamp duty will be paid for dwellings purchased off-the-plan up to a value of $800,000, with a tapering 50 per cent concession available for properties priced above $900,000.
  • Under-Construction Purchases: A massive 75 per cent stamp duty concession is available for homes up to $800,000, which tapers to a 37.5 per cent concession for properties priced above $900,000.

The Holdsworth Verdict

Here at Holdsworth Real Estate, we strongly expect these strategic changes will supercharge infill development across Western Australia. By incentivizing the creation of diverse housing stock, the government is actively paving the way for more affordable housing options for local buyers at all stages of their real estate journey.

While we acknowledge that there are still significant logistical challenges to overcome in the delivery of new homes—including ongoing global supply chain issues exacerbated by the conflict in the Middle East—these Budget measures represent highly positive, actionable steps toward solving WA’s supply shortage through the support of strata housing.

If you are interested in exploring new strata opportunities, off-the-plan purchasing, or simply want to discuss what these new measures mean for your property journey, reach out to the friendly team at Holdsworth Real Estate today. We are here to help you navigate this evolving market!