Everyone deserves a roof over their head—especially in a first-world economy like Western Australia. Yet, for thousands of Western Australians, the reality is starkly different. Many are unable to secure a home of their own, whether to own or rent, due to the entrenched housing crisis in our state.
This crisis demands a sustainable, long-term approach. History shows that quick fixes often lead to even bigger problems. Yet, in the rush to solve the housing crisis “at any cost,” we risk adopting policies that are both short-sighted and dangerous.
Take Build-to-Rent, for instance, a model imported as a potential solution. While initially lauded, it’s now being banned in parts of the USA where it has existed for years, raising concerns about its long-term viability. Meanwhile, other key strategies essential for sustainable housing policies—like containing urban sprawl—are being neglected.
The Cost of Urban Sprawl
The rapid expansion of Perth’s outer suburbs through miniature, standalone homes has been marketed as “affordable housing.” In truth, these developments are anything but affordable when you account for the immense infrastructure costs borne by taxpayers. Instead of utilizing existing infrastructure in established areas, we are placing these massive costs on the government credit card, burdening future generations.
This failure to curb urban sprawl has been highlighted in a new Property Council report. Despite the State Government’s target of achieving 47% of new developments through infill in established areas, only 31% of developments in 2022 met this goal. The rest came from urban fringe expansion.
A recent NSW Productivity Commission report, Building More Homes Where Infrastructure Costs Less, underscores the financial folly of urban sprawl. The report found that infrastructure costs are lowest in central and near-central urban areas, but escalate significantly—up to $75,000 more per dwelling—as development pushes outward. Perth faces the same challenge, yet we persist with an unsustainable model of growth.
Environmental and Economic Consequences
Beyond financial costs, urban sprawl takes a devastating toll on the environment, damaging natural ecosystems. Sustainable housing policy must prioritize building in areas where infrastructure already exists. This means low-rise, medium-density developments in established suburbs, which can now be delivered competitively using modern building techniques and supported by small to medium-sized builders.
National Australia Bank chief executive Andrew Irvine recently echoed this sentiment:
“We need to really push into what I would call medium-density housing—townhouses, low-rise apartment buildings. They’re more affordable, they’re faster to get out of the ground, and that’s what we need in Australia right now, so that we have more housing options for young people.”
However, this solution is being stifled in Perth by excessive taxes and charges on inner-city infill developments. For example, the redevelopment of two new villa houses behind an existing home in the inner northern suburbs, just 10km from the CBD, faced an outrageous $17,588.58 charge by Water Corp just to connect water. Such hidden taxes make inner-city infill developments increasingly unviable, driving up property prices and deterring builders.
In stark contrast, billions of dollars in government subsidies are being poured into infrastructure for urban sprawl. This approach is financially unsustainable and diverts resources from the better alternative—medium-density infill housing.
A Financial Time Bomb
The risk is clear: as urban sprawl continues, the State Government may find itself unable to sustain the massive infrastructure investments required. How will we fund critical services like health and education, alongside expensive public transport and other amenities, if we persist with these unsustainable practices?
A Call to Action
We must act decisively to shift government subsidies away from urban sprawl and toward low-density housing in established areas. This approach not only reduces infrastructure costs but also supports a more financially and environmentally sustainable housing policy.
The long-term interests of our community demand that we embrace urban infill as a cornerstone of our housing strategy.
It’s time to confront the harsh realities of our current path—and that means being honest with ourselves.
By James Limnios, Managing Director of Limnios Property Group
