Group Housing with a Twist

Disclaimer: These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.

Since the post-war housing construction boom, Perth home owners have chosen detached houses built in the suburbs as their preferred housing type. From the late 1960’s double brick and tile became synonymous with quality homes and backyards where considered a must.

Whilst this 50 year legacy continues to play out today, urban sprawl, rising population, affordability issues, traffic congestion and government planning policies has necessitated the development of higher density, infill housing within the established suburban landscape. Suddenly, Perth’s CBD – along with other suburban hubs – is no longer just a place for business, it’s now also a place for residents and the shared lifestyle infrastructure that enhance its liveability.

The choice of housing in inner urban areas is limited by and determined by the market. Understandably, developers will only deliver housing opportunities where there’s a likely profit to be made when selling the product. This often leads to limiting the supply and therefore the choice of housing options for buyers.

Enter an alternative way of delivering in-fill housing where buyers no longer need to rely on developers. “Baugruppen”, a popular method of housing delivery across Europe, provides those seeking a new home the chance to be their own developer, securing a home of their choosing at a price well below the market value.

Typically, participants can secure a home at least 15 per cent below the market price upon completion. That means a $500,000 property will cost only $425,000.

Participants will normally need 30 per cent equity to participate but otherwise, with a project manager on side to oversee the development, it’s not dissimilar to buying off-the-plan where buyers normally pay a 10% deposit, without the developer’s profit margin. And because participants are the actual developer, more choice is available in terms of design, layout and finishes than otherwise available.

Ultimately, participants end up with a strata titled home of their choice with “built-in” 15 per cent equity, mitigating much of the risk of buying off-plan in an unpredictable market.

Baugruppen offers a genuine option for housing development and I’m somewhat amazed we’re only just exploring its possibilities now.

by Hayden Groves
REIWA President
REIA Deputy President

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