Satterley Property Group director of planning Megan Adair has criticised the state government’s approach to planning policy, saying it is crippling the delivery of affordable housing.

Speaking at an Urban Development Institute of Australia WA event today, Ms Adair said policies relating to public open space contributions and medium density were hampering developers’ ability to bring affordable housing to the market.

She said the medium density code, which stipulates regulations for new apartments and houses, was impinging on the ability to deliver smaller, more affordable lots at a time when they are needed.

“What we’re seeing at the moment is a proliferation of different policies coming in that are kind of crippling the system,” she said.

“As much as small lots are attractive and far more affordable, when you look at the overlay of the medium density code, you start having to reduce the area that you can develop, you have to increase setbacks, etc,

“[This is] very well intended and in the long run will have good consequences. In the meantime, the smaller lot product is actually being completely impacted by that.”

Ms Adair said Satterley Property Group, which Data & Insights lists as the largest land developer in the state, was having to rework the way it structured its lots in light of this policy.

She added that the public open space contribution policy, which proposes to charge apartment developers 10 per cent of the land value in lieu of public open space, would hinder development.

“And when we look at the apartment area, again, another overlay [is] the public open space contribution policy, [it] is another tax," she said. 

“If you're going to continue to tax and there's developer contributions, it's one cost after another that has to be passed on.

“I think there's a thought that the developer just absorbs these costs - they don't.

“So the profitability is going down, the affordability is going away, it's not a good situation, and it's not going to change in the short term.”

Ms Adair also called on the government to merge planning and environment legislation, saying that would be “true reform”

Report launch

The UDIA event marked the launch of REA Group’s latest Western Australian Market Report, which highlighted the volatility of the property market nationally over the last three years.

The report stated that during 2020 and 2021, “a combination of record low interest rates, government grants, and a surge in household savings drove one of the fastest episodes of price growth ever witnessed in WA”.

“The speed at which prices were growing slowed considerably over 2022, however, in response to aggressive interest rate hikes.

“Higher interest rates are continuing to flow through to reduced borrowing capacities which, for the average buyer, have fallen by just over 25 per cent since rates first started rising.

Speaking at the lunch, REA Group director of economic research Cameron Kusher said that in the context of such significant falls in borrowing capacities, property prices had shown resilience.

Median dwelling values across Australian cities have fallen by 5 per cent from their peak, while in WA prices have recovered to reach new records in recent months.

REA Group found that as of March this year, Perth’s median house price was $608,000, which is 30 per cent more than March 2020 levels.

It found that Perth’s median apartment price was $415,000 in March.

UDIA WA chief executive Tanya Steinbeck said the new house and land market had experienced a difficult few years, following the peak in demand triggered by government stimulus measures in early 2020.’

“That has been followed by significant worker shortages, material cost escalations and supply disruptions, capped off by relentless interest rate hikes that have dampened buyer demand,” she said.

“Despite those challenges, population growth remains steady and will continue to remain on an upward trajectory, meaning we are expecting continued demand for housing moving forward.”