Perth land prices most affordable nationwide – but lack of variety is our downfall

Posted by

Samantha Reece, Director of PropertyESP recently attended the UDIA lunch with Colin Keane of Research 4 and then participated with the panel discussion alongside David Cresp (Urbis) and Gavin Hegney.

Certainly Colin’s presentation was somewhat telling of Perth’s current status for land sales.

While Perth peaked in 2013 with 1078 lot sales per calendar month.  In 2016 our underlying demand for land is now 637 lots per calendar month and actual sales are 478.

However there are a number of reasons why we are having this reduced success rate – and it is primarily to do with population.

First of all, Perth’s demand for land is driven predominantly by employment.  For every 100 people employed there is the direct correlation of 38 lot sales.  This ratio in Sydney is 17 lots to every 100 people and in Melbourne 26 lots.

To broaden our market we therefore need to consider a number of options – including net migration with emphasis on education, temporary work visas and holiday visas.

Nationally 56% of land sales are non-local demand.  In Perth it is 16%.  This means that 84% of our land purchasers are based locally.

Perth therefore needs to emphasise our market and attractive lifestyle in order to trigger interstate and foreign investors and certainly consideration needs to be given to delaying the State Government’s foreign buyer’s tax, as this could further reduce demand.

Tourism is also a key player with our land sales growth.

Nationally 50% of short term visas are for holidays – in WA our rate is 11%.  As Colin stated we need to grow our portfolio of tourism experiences and hence concepts such as gondolas connecting Elizabeth Quay and Kings Park no longer seem so farfetched.

Perth has well recognised tourism sites such as Rottnest Island, Kings Park, Elizabeth Quay and Swan Valley.  But now what we need to do is make these experiences deeper and more impressive so as to drive tourism spend to our state in preference to others.

Immigration also catalysts further population growth and so attracting students to WA for education purposes will undoubtedly attract their families.  The same can be said for immigration as a whole.

But there were two final gems of knowledge.

Firstly that WA has the cheapest land in the nation at an average price of $225,000 compared to Melbourne $272,000 and Sydney $423,000.

But while this is positive news, it is our stagnation in the small block sizes ie 450sqm that is killing the market and hence we also need variety of lot sizes to cater to all demographics.

And secondly, WA needs variety across a number of realms – our economic basis, our population and our supply of housing options.

Undoubtedly WA needs to grow its global handshake.

While Government has reduced the FHOG and other such stimulants, what its core focus should now be, is to attract and then retain people.

As such, while the Government may be initially focused on servicing WA in regards to Metronet etc, its top priority should be to work with private enterprise, on ways to boost WA and its profile.

Major events, stimulating tourism sites and golden education opportunities are the ingredients that will return WA to a stronger population market – and one that will help the economy overall.

Perth is experiencing a period of disruption – and that is going to definitely also going to affect the land sector.  The question is – are you prepared?

 

4 comments

  1. Cracking article Sam, really interesting to see cut and dry how it is and what is needed for WA’s future.
    Not surprised that Tourism is right up there on the priority list – we need to follow the lead of Tassy in this regard I say.

    Keep it coming!

    [cid:image001.png@01D2D953.90F4C900]

    Rhys Pearce
    Relationship Manager
    ANZIIF (Snr) Assoc CIP
    M: 0448 249 293 | P: 08 9213 9844 | F: 08 9481 4311

    http://www.mgib.com.au

    LOCAL PEOPLE SERVING LOCAL PEOPLE

    NOTICE
    If you are not an authorised recipient of this e-mail, please contact MGIB immediately by return E-mail or by telephone on +61 8 9722 3700. In this case, you should not read, print, re-transmit, store or act on this E-mail or any attachments. Please destroy the message and attachments. This E-mail and any attachments are confidential and may contain legally privileged information and/or copyright material of MGIB or third parties. You should only re-transmit, distribute or commercialise the material if you are authorised to do so. This notice should not be removed. Important Privacy Notice – We value your privacy. Our Privacy Policy sets out how we collect, disclose and handle personal information under the Privacy Act and the Australian Privacy Principals. By providing us such information you consent to these practices unless you tell us otherwise. Our Privacy policy is available at http://www.mgib.com.au or by contacting us.

    Like

  2. Thanks Sam, interesting reading.

    What do you think the minimum size block could be in Perth based on existing bias and reluctance to change?

    Regards

    Nichola

    Sent from my iPhone

    >

    Like

    1. I think we have reached that at 250-280sqm – but we cannot continue to call family blocks 450sqm! I know that the larger lots at Bushmead have been selling well because they offer something different. It is important to offer choice.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s