State Government Unveils $250 Million Housing Initiative to Underwrite Apartment Developments
The Western Australian State Government has announced a groundbreaking $250 million program designed to underwrite new apartment developments, with the goal of increasing housing supply by approximately 1200 units. This initiative, part of the upcoming May State Budget, aims to address longstanding challenges in the construction finance sector by providing a pre-sale guarantee through KeyStart.
Addressing Developer Financing Hurdles
Treasurer Rita Saffioti highlighted that a major obstacle for developers has been meeting bank lending criteria, which typically require selling 50 to 60 percent of apartments off-the-plan before securing construction loans. This requirement often delays shovel-ready projects or renders them unviable. The new pre-sale guarantee program will see KeyStart commit to purchasing up to 50 percent of unsold homes in eligible developments, thereby mitigating this risk and accelerating project timelines.
Program Details and Eligibility Criteria
Under the program, apartments guaranteed by the State Government will be acquired by KeyStart at a discounted rate: 10 percent below market value in metropolitan areas and 7.5 percent in regional areas. These units will then be integrated into the $210 million Urban Connect shared equity program, allowing homebuyers to co-own properties with KeyStart. Eligibility for developers includes ensuring that at least 30 percent of apartments are priced below the median house price of $880,000, as per the Real Estate Institute of WA index. Priority will be given to developments in Metronet precincts, with regional projects benefiting from slightly adjusted criteria, including a higher guarantee proportion and lower purchase discount rates.
Supporting Homebuyers and Market Growth
Premier Roger Cook emphasized that this initiative aligns with the government's vision to ensure every Western Australian has access to a home. He stated, "In this year's Budget, we are prioritising housing, including unlocking and delivering more land supply, building more homes for Western Australians and helping first home buyers get into the market." Housing Minister John Carey added that the program targets first-homebuyers and downsizers, reinforcing housing as a top budgetary priority.
Additional Housing Measures Announced
In conjunction with the underwriting plan, the State Government revealed increases to property price limits for KeyStart's low deposit loans, rising from $800,000 to $860,000. Similarly, limits for the Urban Connect shared equity scheme will increase from $730,000 to $800,000, while other shared equity products will see limits rise from $660,000 to $720,000. Applications for the pre-sale guarantee program are set to open in the second half of this year, marking a significant step toward addressing housing affordability and supply challenges in Western Australia.
