The Cook Government’s Pre-sale Guarantee tackles one of the most stubborn financial barriers in apartment construction. The mechanics matter for anyone involved in delivering medium-density housing.

Apartment development in Australia does not stall because builders cannot build. It stalls because the money needed to start building rarely arrives until enough units have already been sold.

That is the pre-sale problem. And it is not new. Banks have required high proportions of off-the-plan sales before releasing construction finance for years. The logic is sound from a lender’s perspective. The consequences for housing supply are well understood. Projects that are ready to go, with approved plans, willing builders, and genuine demand, simply do not proceed.

The Western Australian Government has moved directly at this barrier with a $250 million Pre-sale Guarantee, announced as part of the 2026-27 State Budget. The mechanism is straightforward in principle. Keystart, the state’s low-deposit lending arm, will guarantee to purchase up to 50 per cent of unsold homes in a qualifying apartment development upon completion. That guarantee is designed to satisfy lender pre-sale requirements and allow construction funding to flow.

The guarantee lapses as units sell during construction. If it is called, Keystart buys at a minimum 10 per cent discount to market in the metro area, or 7.5 per cent in regional WA. Those homes then feed into the $210 million Urban Connect Shared Equity program, or other government housing programs, making them available to first home buyers and lower-income households.

Who It Is Aimed At

The scheme is clearly targeted at medium-density supply. Apartments and townhouses. The kinds of projects that are often described as the missing middle of Australian housing, and that have been the most acutely affected by financing constraints over the past several years.

To access the guarantee, developments must commit at least 30 per cent of their homes to sale at prices at or below Keystart’s property price limit, currently pegged to the REIWA median house price for Perth. That limit has also been lifted as part of the same announcement, moving from $800,000 to $860,000 for standard Keystart loans.

Regional developments get more generous terms. A higher guarantee proportion and a lower purchase discount rate are both on offer for projects outside the metro area, reflecting the added difficulty of achieving pre-sales in lower-volume markets.

Applications are expected to open in the second half of 2026.

The Problem This Actually Solves

It is worth being precise about what the pre-sale requirement does to a development pipeline.

A developer with an approved project, a willing builder, and reasonable demand still cannot proceed without finance. Finance does not move without pre-sales. Pre-sales in a market without enough comparable stock are slow to accumulate, particularly for apartments in locations where buyers are unfamiliar with the product type or nervous about off-the-plan risk.

The result is a feedback loop. Undersupply keeps demand elevated. Demand cannot be met because projects cannot get financed. Projects cannot get financed because pre-sales are insufficient. And pre-sales are insufficient partly because buyers in undersupplied markets have limited experience with the product.

Projects that are ready to go, with approved plans and genuine demand, simply do not proceed. The pre-sale problem is not new. But this response to it is worth watching.

What the guarantee does is interrupt that loop at the financing stage. By giving lenders confidence that 50 per cent of the project has an effective buyer of last resort, it removes the primary barrier to construction funding. The project can commence. Buyers transact during construction at normal market prices. In most cases, Keystart never purchases anything. The guarantee is a backstop, not a buyer.

For builders engaged in medium-density work, or wanting to move into it, this changes the viable project calculation meaningfully. Developers who previously could not satisfy lender requirements may now be able to proceed.

What It Means on the Ground

The immediate effect, if take-up is strong, is more medium-density construction in WA. The government estimates up to 1,200 new apartments and townhouses could be unlocked through the initiative.

That is not a large number in the context of WA’s overall housing needs, but it is also not negligible. More importantly, the mechanism itself is what matters. If it works, it demonstrates that pre-sale guarantees are a viable demand-side tool for unblocking development pipelines. That is a proof of concept with national implications.

For builders, the practical opportunities are worth thinking through. Projects that stalled at the pre-sale stage may now be revived. Developers with shovel-ready approvals but no finance pathway now have a clearer route. Medium-density builders with capacity who could not find fundable work may find more of it becomes available.

There is also the affordability dimension. The requirement that 30 per cent of homes in any supported development sell below Keystart’s property price limit is not incidental. It is a direct attempt to use the guarantee as a lever for affordable supply. Builders working in this segment need to understand how that constraint interacts with project economics, particularly in higher-cost construction environments.

The Broader Housing Context

This announcement sits inside a larger WA housing push. The state government has been running hard on supply across multiple fronts. Planning reforms have been underway. Infrastructure funding has been committed. Stamp duty concessions on off-the-plan purchases are already in place. The Keystart product settings have been regularly adjusted to track market movements.

The Pre-sale Guarantee is the piece that directly addresses the construction finance gap. The other measures reduce barriers and lower entry costs. This one specifically targets the point at which otherwise viable projects fail to proceed.

It is also worth noting that similar mechanisms exist or have been trialled in other jurisdictions. The evidence on whether they deliver supply at scale depends heavily on uptake, project economics, and how effectively the state manages its exposure if guarantees are called. WA has some structural advantages here. Keystart’s existing role in the market means the infrastructure for this kind of intervention already exists.

What Builders Should Watch

Three things are worth tracking as this rolls out.

First, whether the eligibility criteria and discount rates are pitched at a level that makes the scheme commercially viable for developers. A guarantee that does not actually change project economics will not change project outcomes.

Second, whether the affordable pricing requirement at 30 per cent of homes can be absorbed by typical project models in the Perth market. If the floor price is set correctly against current construction costs and land values, this is workable. If it is not, applicants will be thin on the ground.

Third, whether applications actually open in the second half of 2026 as indicated, and what the processing timeframes look like. Policy announcements and operational programs are different things. The builders and developers who will benefit most are the ones watching the fine print when applications open, not just the headlines when they are announced.The mechanism is credible. The funding is committed. The intent is clear. The question now is execution.

Author: TGB Editorial