Seventy-seven households and businesses in Perth have been issued with a letter warning that the government might compulsorily acquire their land to build a tollway that will be paid for using federal funds given to Western Australia in compensation for its reduced share of GST.

But the transport minister, Dean Nalder, said he was “still not convinced” that the government had charted the best possible route for the $1.6bn Perth Freight Link, which is due to start construction next year.

Forty-five homes and 32 businesses on and around Stock Road in the suburb of Palmyra have received letters from Main Roads warning their properties would be “impacted” by the proposed road, which was announced as part of the Abbott government’s first budget in May 2014.

Palmyra residents held a rally on Sunday against the forced acquisition of their homes. The Labor leader, Mark McGowan, attended the rally and likened their struggle to Australia’s most well-known (albeit fictional) legal battle.

“I don’t want to compare it to The Castle but we’ve got here a whole lot of Dale Kerrigans who just want to get on with their lives in their homes,” he said.

Main Roads sent the letters in late April and invited landowners to arrange a meeting with planning authorities.

Speaking to reporters on Monday, Nalder said he was “very sympathetic” to impacts on homes and had asked planners to see if they could find an “alternate solution”, saying he was “still not convinced that that is the best possible route”.

The road will connect the Kwinana Freeway to Fremantle port by approaching from the south of the city, cutting across Roe Highway and going up Stock Road and Leach Highway to High Street in Fremantle, ending a few kilometres short of the port entrance. Last year the Abbott government announced it would provide 80% of the funds – or $925m. This month the state treasurer, Mike Nahan, said the project would be one of the beneficiaries of the $499m infrastructure payment given to the state before the federal budget.

The route is expected to be finalised about November. Construction on stage one, though the sensitive Beeliar wetlands, and stage two will begin next year.

The scheduled finish date is 2019, by which time Nalder said he hoped to have solved the “problem” of how to prevent a bottleneck when the tollway abruptly ends at the High Street traffic lights.

Nalder admitted he had no idea what the solution would be, adding the government was looking at options ranging from doing nothing to building a tunnel under or new bridge over the Swan River, and he “couldn’t even tell you an estimate” of what it might cost.

He said the option to do nothing would work, “it’s just less than ideal because we’ve made all that effort to get them there, we’ve just got to get that last mile”.

Peter Newman, director of Curtin University’s sustainability policy centre, told Guardian Australia that it was “completely unusual” for the WA government to have to acquire urban land on this scale.

“Perth doesn’t do this sort of planning,” he said. “There’s no way they can sell this to the public.”

“No one builds freeways through the centre of cities these days. Cities have given it up in every part of the world now. They don’t even do it in America anymore.”

Newman has previously described the road as a “waste of public money”, arguingPer traffic should be directed to the as yet undeveloped outer harbour in Kwinana, further south, which is supposed to shift the load off Fremantle once the 200-year-old port reaches capacity in 2030.