The housing minister says the construction industry could be hit with more cost increases as a result of the conflict in Iran.
Housing Minister John Carey says the construction industry could face more cost pressures as a result of the conflict in Iran.
Speaking at a press conference to mark construction of H-U’s social and affordable housing project in Murdoch today, Mr Carey said price escalations could impact an already constrained industry.
“We are concerned that the rise in petrol prices ultimately affects the ability to keep costs in place for any construction development,” he said.
“We know already medium and high density projects in Western Australia are tough to deliver.
“One of the critical factors has been the significant cost escalations since the Covid pandemic.
“So yes … it does worry me about the impact of the war in Iran on cost escalations and fuel price increases and how that is going to affect future medium to high density construction.”
H-U’s 213-unit, 23-storey social and affordable housing tower in Murdoch was mooted in 2024, when it was expected to cost $100 million to build.
Build costs of that project have increased to about $130 million and the entire cost of the project is now $169 million.
The project is being backed by $207.6 million in government funding, which is expected to also contribute to the operation of the building.
The state government is chipping in $46.2 million from the state government and about $165 million from the federal government as part of its Housing Australia Future Fund.
In March 2024, H-U (then Hesperia) anticipated the build-to-rent component of the project, which then included an office building, would be complete this year.
But the build, comprising 65 social and 148 affordable dwellings, is now expected to finish in mid-2028.
Foundation Housing was appointed as the community housing provider for the Murdoch project and will own the asset upon its completion, with H-U acting as development manager.
A Foundation Housing spokesperson said due to limited demand for office accomodation within the precinct, the office component would no longer proceed.
"Human Urban (H-U) is now proposing a multi-storey car park on the site, comprising 515 car bays and 49 motorcycle bays, with ground floor retail space," he said.
The car park is designed to cater for workers at the nearby Fiona Stanley Hospital, as part of the Murdoch Health and Medical precinct.
A Foundation Housing spokesperson said the delay in starting the project was due to a value engineering phase that occured due to a "significant cost escalation threatened the project’s viability".
Foundation Housing chief executive Chris Smith said key workers including those in healthcare and people who had lived in the area before and wanted to come back were among the applicants to live in the building.
The announcement follows Foundation Housing’s appointment to manage the former Frasers Suites in East Perth, which is currently being repurposed into social and affordable housing.
Dale Alcock’s PACT Construction has been appointed to build the project.
