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Perth loan scheme to pump apartments into Metronet areas a ‘massive failure’

A pilot loan scheme introduced by the state government to incentivise urban infill around train stations and near the Perth CBD is failing to lure homebuyers into purchasing an apartment.

The two-year Urban Connect Home Loan Scheme pilot was capped at 300 loans and designed to encourage those on lower to middle incomes to buy apartments close to Metronet precincts and priority urban infill areas across Perth.

Keystart mortgages for apartments have not been taken up as quickly as the government wanted.

Keystart mortgages for apartments have not been taken up as quickly as the government wanted.

The program was launched in July 2022 but Keystart data reveals that just 19 loan applications had been received with 17 proceeding – a tiny 5.6 per cent of the target.

With a deposit of 2 per cent and no lending insurance, singles earning up to $180,000 a year could purchase an apartment worth up to $550,000. Couples and families with a combined income of up to $200,000 a year could buy one for $650,000 or less.

Despite the state government expanding the program to allow one-bedroom apartments and pre-sale off-the-plan properties to be eligible for the scheme under May’s state budget, just six applications have been made since then bringing the total loaned under the program to $6.8 million.

By comparison, Keystart currently has nearly 11,000 clients on its loan book valued at $2.62 billion.

Opposition housing minister Steve Martin said the scheme was “botched” and needed to be recalibrated or scrapped.

“Housing Minister John Carey proudly touted this program as a way to encourage Western Australians into higher density housing and relieve the housing crisis,” he said.

“It has been a massive failure. Quite literally, nobody is buying what the Minister Carey is selling.”

Martin said Carey needed to come clean on how much the roll-out had cost taxpayers and how he would next try to encourage people into higher-density housing near transport hubs.

Carey said the government was using every lever it could to boost housing supply in the state of which the urban connect scheme was just one.

“After six and a half years in Opposition – the WA Liberals have still not released a single housing policy – let alone any policies to support infill or housing diversity in WA,” he said.

“The Cook Government will continue to deliver and support reforms to assist Perth meet the density infill and apartment developments that it desperately needs to boost housing supply.

“The WA Liberals are only interested in opposing our on-going planning reforms so they can slap more red tape on and make it harder for major housing developments to get approved.”

A Keystart spokeswoman said the organisation was monitoring market conditions and would seek industry feedback ahead of a review toward the end of the pilot period.

“Due to the unprecedented effects of COVID-19, challenges are being experienced nationwide in delivering this mode of affordable housing product, noting that a significant number of projects are not currently proceeding due to prevailing market conditions,” she said.

Australian Apartment Advocacy director Samantha Reece said the loans were still too restrictive.

“Very few apartments at the moment are in the affordable range of $560,000 or lower as they are being built predominantly in the western suburbs where two-bedrooms are selling for $750,000-plus,” she said.

Reece said other major factors hampering efforts to get West Australians in higher density developments and shaking confidence in the apartment market were the number of apartment builders going bust, and build quality.

Strategic Property Group managing director Trent Fleskens said Keystart needed to make its products more competitive if it wanted to incentivise urban infill.


While Keystart mortgagees don’t need to pay insurance fees or need bigger deposits the trade-off is that they pay higher interest rates. The current rate on offer is 7.6 per cent compared to the national average of 7.3 per cent while some banks are still offering loans below 6 per cent.

Over the last financial year, 18 loans were closed as mortgagee in possession.

“Keystart has the ability to be a super-valuable agent for good in WA, especially in facilitating urban infill,” Fleskens said.

“But first, they need to stop charging their clients – the most financially vulnerable homebuyers in the state – the highest interest rates in the country for a comparable product and trying to convince everyone it’s OK.”

The Keystart spokeswoman said the government had initiated significant reforms to increase medium and high-density living including lifting the stamp duty concession to 100 per cent for apartments under $650,000, and a 50 per cent land tax concession for build-to-rent developments.

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