Vacant lot sizes are shrinking as developers seek to realise profits in Perth’s outer suburbs, a trend one prominent industry insider says is contributing to sprawl.
Limnios Property Group managing director James Limnios said the median size of a new building lot in the Perth metropolitan area had fallen by a third in two decades, from 564 square metres to just 375 square metres.
Vacant land for sale along Perth’s northern coastal communities.Credit: Ross Swanborough
“The rapid geographic expansion of the city has put growing pressure on land availability and costs which in turn is forcing land developers to gradually reduce the size of their home sites to maximise the profitability of their developments,” he said.
“The dream of a new spacious home with a white picket fence on a large lot with room for a swimming pool was successfully sold to generations of Western Australians if they relocated to a new outer city housing development.
“However, that dream is rapidly disappearing as this dream is transformed by urban sprawl into a housing congestion nightmare stoking future financial, social and environmental challenges.”
Figures for the June quarter show in the north-west growth corridor of Perth, one-third of new lots are sized at or below 320 square metres, enough for a small house and a patio but virtually no front verge space to plant a tree.
According to the Urban Development Institute of Australia WA, the average price for a new block of land in Perth’s metropolitan area now sits at $305,177, a 25 per cent increase over the previous year and a nearly 10 per cent gain in only one quarter.
UDIA WA chief executive Tanya Steinbeck said while average lot size in greenfield areas had decreased over 20 years, that trend was attributable to a range of factors.
“Firstly, the diversity of product that is being delivered to the market now, has brought down the overall average size,” she said.
“Developers are delivering everything from micro lots and small cottage lots, through to larger, more traditional sized lots for larger homes within their projects. That overall diversity brings down the overall average size.”
But as affordability has declined, developers had aimed to meet the market on prices, said Steinbeck.
“Developers are primarily driven by the market, and responding to what consumers want, within the confines of government planning policy,” she said.
“The nature of our changing lifestyle in Perth, ageing population, smaller household sizes, more efficient public transport, quality public open spaces and budget constraints are all factors driving down those average lot sizes across the metropolitan area.”
Land developers have faced rising costs for land, materials and infrastructure, with Perth recording the nation’s biggest construction cost escalation amid ambitious housing targets and megaprojects.
Arcadis cost manager Matt Mackey said its latest Australian Construction Market View showed Perth was volatile with building costs skyrocketing significantly above expectations, up 11.1 per cent on last year against a forecast 7 per cent, and almost double that of the next-fastest escalating Australian city.
“The outlook is expected to soften over the next few years, however, construction costs in Perth will still mark a total 42 per cent increase by 2028, almost double what was expected at the midpoint of this year,” he said.
Mackey said the rise was underpinned by new megaprojects, such as the $5 billion Perth Airport development, $1.8 billion new women’s and babies hospital, and the $3.8 billion Burswood Point urban project, alongside ongoing infrastructure investments in health ($839 million) and education ($355 million).
“It is unclear whether the delivery of these projects is achievable with the current skills and labour shortages across the industry – which are probably more real here in WA than in other states currently,” he said.
“The timing of government-led projects and infrastructure may need to be reviewed to ensure that they are not crowding out investment in the private sector or other priority areas such as housing.”
To find the 13,000 workers currently needed across the state, the state government has been attempting to attract construction workers from the eastern states with incentives such as relocation packages.
Mackey said it was also looking to reduce the number of competing projects through prioritisation and staggering key investments, so the market could better respond while delivering state infrastructure.
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