The federal government and state government of Western Australia have signed a memorandum of understanding to work together on city deals, starting with Perth.

City deals are formal agreements that bring together local, state and federal governments to work collaboratively on and better coordinate city development, with private sector and community involvement.

Part of the Perth City Deal will involve increasing infill housing opportunities in the notoriously sprawled city, particularly around the government’s METRONET rail project.

The MOU said governments would commit to “setting policy frameworks for density, so there are more, diverse homes in active and accessible neighbourhoods, well connected to jobs, services and recreation”.

Governments also agreed to investigate “value capture opportunities that may facilitate land value uplift in infrastructure corridors to help fund the cost of key METRONET projects”.

The MOU said the deal would be underpinned by government funding of infrastructure projects.

The federal government at the same time as signing the city deal announced a $3.2 billion commitment to Western Australia in the upcoming 2018/19 federal budget, which will facilitate $5.4 billion in infrastructure development. For METRONETit has promised an additional $1.05 billion, bringing total funding to $1.84 billion.

“The City Deal is designed to leverage the transformative investment in METRONET to deliver city shaping reforms in the areas of land use planning, housing release and affordable housing and smart infrastructure,” a joint statement from prime minister Malcolm Turnbull and WA premier Mark McGowan said.

The news was welcomed by the Property Council of Australia’s WA branch.

“The twin announcements of new federal infrastructure funding for WA and the City Deal will provide communities and businesses in WA with greater certainty that the local economy will return to strong growth and new jobs will be created,” Property Council WA executive director Lino Iacomellasaid.

“The property industry in WA was waiting for these announcements to provide the confidence that major infrastructure projects like METRONET will definitely proceed and the associated station precinct developments will go ahead.”

He said it was now important that the independent Infrastructure WA promised by the government was set up quickly.

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