State Government moves to underwrite new apartment developments through KeyStart housing plan

The State Government is set to boost housing supply by 1200 apartments through an innovative $250 million program to underwrite new apartment developments.

The move will help developers to meet lending criteria from banks which typically requires them to sell about 50 to 60 per cent of apartments off-the-plan before they can borrow construction finance.

Treasurer Rita Saffioti said the challenge has long been a problem and can significantly delay shovel-ready projects from getting off the ground. She said the requirement sometimes even made projects unviable.

But a new plan to be announced today – called the pre-sale guarantee – will see Keystart provide a guarantee to purchase up to 50 per cent of unsold homes in an apartment development.

The program — which will form one of several initiatives to boost housing in the May State Budget — means that any apartments guaranteed by the State Government will be sold to KeyStart agency at a 10 per cent discount on the market value in the metropolitan area, and 7.5 per cent on regional value.

These apartments will then go into the $210 million urban connect shared equity program, which allows homebuyers can to co-own a home in conjunction with KeyStar.

Treasurer Rita Saffioti said construction finance was a major issue for developers, and she believed the program “could turn the dial” on development.

“We are basically underwriting these projects,” she said.

“If a developer sells them all, that’s fine. We don’t go through and purchase them.

“But we can access them at the end of the project, and we’ve got guaranteed access to that stock below the market value.

“We can can then use that stock for the shared equity program.

“So it’s really about working with industry getting these projects built, and if needed taking some of the stock.”

One of the eligibility criteria for developers is for at least 30 per cent of the apartments in an development to cost less than the median house price according to the Real Estate Institute of WA index, which is currently $880,000.

Ms Saffioti said developments in Metronet precincts will have priority.

In a bid to encourage regional development, country areas will have slightly different eligibility criteria involving a higher guarantee proportion and a lower purchase discount rate.

Applications will open in the second half of this year.

Premier Roger Cook said it would help more people into their own home, through KeyStart.

“My Government’s vision is to ensure every Western Australian has a home,” he said.

“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 said it would help first-homebuyers and downsizers, and that the move reflected the State’s density housing situation.

“In unprecedented times, we need to take unprecedented measures to bolster housing supply which is why we are establishing the pre-sale guarantee to help apartments get off the ground and get built,” he said.

“We know Western Australia has a historical challenge when it comes to getting medium and high density projects built, that’s why you’ve seen a vast number of measures by this Government to get apartments built in Perth.”

The State Government will today reveal increased property price limit for Keystart’s low deposit loans, increasing from $800,000 to $860,000.

Price limits for the urban connect shared equity scheme will increase from $730,000 to $800,000, while limits for its other shared equity products will increase from $660,000 to $720,000.