It’s time for a major rethink of housing across the Wheatbelt and the rest of regional Western Australia, WAFarmers CEO Trevor Whittington says
In 2001 it cost $125,000 to build a new home in Perth, about what you will pay today for one of the cheapest houses in the smallest Wheatbelt towns of Wyalkatchem or Wickepin.
By 2010, house construction costs had more than doubled to $270,000, which is what you can expect to pay today for a 1960s-built small brick house in one of the super towns of Merredin or Moora.
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There are few incentives to build a new home in regional Western Australia |
Come 2023 and the average built price in Perth has hit the $400,000 mark – which is what you would pay for a big house built by a retired farmer back in the 1980s in Wagin or Wongan Hills. That, in turn, is something that would cost close to $800,000 to build today.
In each case, the block value of buildings in the bush is anything between $10,000 to $50,000 (between $10 to $50 per square metre) depending on which side of the tracks you are building on.
Meanwhile, in Perth average blocks start at around $750 per square metre, which is why the old aspirational 1000m quarter acre block has been cut down to around 300 square metres ($250,000) for most Perth house and land buyers.
It means that those who built in the once far-flung suburbs of Karrinyup or Booragoon have reaped solid capital gains at around 8 per cent every year, while the Wheatbelt has experienced next to zero capital gain for the past 30 years.
This means very few are building houses in the Wheatbelt, as the capital gains that Perth has traditionally offered is too great to justify spending $500,000 on a new house on a $50,000 block.
in an inland country town that will probably be worth less, twelve months after the keys have been handed over.
It simply does not pay to build new houses in country towns, which has left us running down our housing stock as old houses fall into disrepair or become so out of date no one will live in them.
The combination of changing community values with farmers following their neighbours and kids to the coast, changing expectations on what is acceptable as housing for first home buyers / renters, the inflated cost of construction and the opportunity cost of missing capital gains is causing a country housing crisis.
While most community leaders and many farmers like to think their country towns have a future, the brutal reality is they don’t unless we address this housing problem.
When the village idiot can get a job in the mining village doing housekeeping week-on, week-off on $100,000 a year, and can afford a brand-new Stockland 4 x 2 x 2 on 385 square metres for $584,400 in Perth’s northern suburbs, why should we expect skilled people to accept living in a 1960s asbestos house that’s half the size of modern homes 250km from the beach?
Something has to give, and it’s been the young qualified who are refusing to move or stay in country towns.
If inland country towns are going to compete with either Perth, the big money mining towns or even the coastal farming service centres of Geraldton, Albany and Esperance, we need to radically rethink our housing shortage across the Wheatbelt communities.
I know that some of the bigger farmers have been quietly buying the better housing stock in towns to accommodate their workers, which then allows those workers to invest in a negative geared property in Perth or down south to get them onto the housing ladder.
This is a win-win, as it locks workers into country towns at least while their children are in primary school, as they have a cheap quality rental but also the opportunity to climb up the property ladder by buying a couple of investment houses.
But farmers buying the better houses is also a negative, as it is locking up good properties that could have been rented or sold cheap to service providers like the local farm dealership to house their mechanics, which all farmers need.
One could ask why dealers are not investing in housing just as the miners are – but I suspect the returns would have to be around the North West’s rates of 10 per cent to justify the lack of potential capital gain.
Dealers have worked out they have to pay more to attract workers, but few workers or their families want to stay in substandard houses, no matter how cheap the rent – and due to the shortfall of suitable houses, country rent is often not that cheap.
What we have instead, thanks to the Royalties for Regions program, is lots of big recreational centres in towns struggling to attract young people.
What’s the point of good sporting facilities if people are voting with their feet and leaving town?
But hindsight is a wonderful thing. Let’s focus on the future… So what’s the solution?
The state government is allocating $750 million out of its $160 billion budget over the next four years on building 3,300 social housing properties at $500,000 each – which gives you an idea of where they stand with their housing program for the battlers. But this not for regional development.
There is, however, $70m unallocated in the budget fund for the provision of Future Royalties for Regions Projects over the next three years.
I would allocate that to inland country shires on a dollar-for-dollar basis for towns to build new houses for service personnel.
Dividing the $70m across the 42 Wheatbelt Great Southern Shires should be enough to build 140 houses, with a bit of community support if the original money was matched via borrowing and a long-term rental deal with the dealership or service provider it would raise another $70m and build 280 houses.
That’s enough to flood the regions with 280 additional mechanics, electricians, metal workers, technicians and apprentices, across 42 towns over three years – all living in quality new houses with families going to school.
It would also see a couple of new houses a year going up in towns like Narembeen or Corrigin and more in the bigger centres like Narrogin and Merredin. It’s the game changer needed to reboot out towns.
Decent houses improve the chances of attracting those skilled workers who can then afford to set themselves up with negatively geared investment property. It’s a win-win that country towns need to pursue with their local MP and the councils with the state government.
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