Apartment research shows interesting trends

 

National online real estate company REA just recently released some results based on research that they conducted on a national level with 12,618 apartment buyers (of which there were 415 respondents – on par with a poll).

PropertyESP has reviewed this information, from a marketing perspective, which is one of our key areas of strength.

Firstly, what was very interesting to note, was the increase in WA owner occupier buyers in the apartment market since 2015, which grew from 41% to 60% in 2017.

When considering the mix of apartments in any development, it is imperative to consider your local demographic profile and even undertake research in the marketplace to understand what this market is seeking.  We have known many developers to be stuck with one bedroom apartments, while the three bedrooms sold first.  While one bedrooms may give a higher yield – this is only the case, if they in fact sell!

30% of these buyers were also considering townhouses in conjunction with apartments with the intent of reducing the amount of maintenance time, as would be expected, from a traditional home.  As such apartment developers don’t just face competition from other apartment developments – but other small housing options as well, such as townhouses.

The research indicated that the time of conversion to sale was approximately 4.5 months.  43% of the buyers were also reading something related to property on a daily basis and hence this tends to demonstrate that regular social media posts/e-news are able to assist with promoting your project in this realm.  This is especially so if you need to nurture buyers over a 4.5 month period.

Buyers were interested in market insights, advice about buying off the plan and apartment designs and amenities in the property related literature.

When asked what were the benefits of buying off the plan, respondents indicated:

  • Locking in current market price (49%)
  • Modern features (47%)
  • Brand new – no one has lived there (45%)
  • Cost savings (45%)
  • Customised finishes (45%)
  • Flexibility to choose floor plan (40%)

However what restricted their decision to buy off the plan included:

  • Unexpected costs/going over budget
  • Funding the purchase
  • The stress of construction
  • Not knowing what to expect

When asked what influenced the purchase of their apartment, respondents indicated:

  • Price (62%)
  • Location (49%)
  • Developer’s reputation (48%)
  • Access to public transport (46%)

When asked what amenities buyers were looking for, respondents indicated:

  • Storage in the car park (64%)
  • Fully equipped gym (42%)
  • Outdoor entertaining spaces (42%)

74% indicated that some kind of incentive influenced their purchasing decision, with 62% indicating a preference for the developer to pay stamp duty, 58% stating free upgrades and 45% a rental guarantee period.  However this is not always the case and we have witnessed projects in Perth, which have in fact put up their prices in the last six months.  In contrast some areas are oversupplied and hence incentives are a sales tool to generate traction with some buyers.  Again it is on a suburb by suburb analysis.

What was also interesting to note was how buyers evaluate a developer’s reputation.  54% quoted the developers track record with previous projects, 40% indicated a long history in the market and 30% positive word of mouth.  On that basis companies need to be mindful of not just marketing their projects but also their company brand.  It all ties in together.

If you are, like us, excited about the future of the Perth apartment market and you are keen to gain a competitive advantage, please contact Sam to discuss further at info@propertyesp.com.au.

Advertisements

How a few streets can make a big difference to property values

As always, keen to see what is happening in the Perth apartment market, PropertyESP recently took a look at settled sales for the East Perth area from 2015-2018.

Looking just at apartment houses, apartment units and penthouses we found that the East Perth market was showing signs of price recovery across the board.

east perth graph 1 2018

But when we broke East Perth into precincts we found that Wellington Square compared to Claisebrook and the remainder of East Perth, definitely demonstrated a price difference.

east perth graph 2 2018

And this was evident whether talking about apartment houses, units or penthouses or even 1, 2 or 3 bedrooms.

east perth graph 3 2018

east perth graph 4 2018

Who would have known?

It is quite evident that while sales vary across suburbs they can also do so within suburbs and hence before you purchase land for development it really is best to check your facts.  At the end of the day it can play a major factor in your pricing and profit and hence it is essential to know how the sums add up!

If you are seeking that level of detail then contact Sam at PropertyESP because we are all about drilling down into the nitty gritty! And we are the only company in Australia that provides this kind of insight!

The numbers have it – why the proposed changes to Scarborough should be embraced

You may have seen the recent article in the West Australian outlining the research undertaken by 3 Oceans on the Scarborough foreshore with 890 respondents.

This research sought to determine the level of support or opposition to their proposed 43 and 35 storey developments on the corner of Scarborough Beach Rd and West Coast Hwy.

Not surprisingly, overall 63% of the respondents supported the proposal and this was mirrored regardless of whether it was a Scarborough based resident, City of Stirling or Perth based resident.

The number one reason for wanting the proposal to proceed?  Respondents felt the area needed a revamp (56%), it would bring in more tourists (44%), it would create more jobs (32%) and it would be good for local business (31%).

The Scarborough area has languished somewhat for close to 20 years and this has been directly attributed to previous governments’ reticence to support density.  But after spending $100 million on the Scarborough foreshore, this area is now ripe for ongoing investment and it is critical that the current Government embraces the proposed changes to allow the revamp of Scarborough to truly come into play.

Just like Hillary’s Boat Harbour, Graham Farmer tunnel and Elizabeth Quay, there has been resistance from a small vocal proportion of the community.  And yet once delivered, the benefits have been both recognised and celebrated – and at PropertyESP we can’t help feel that this will be the case for Scarborough as well.

The fact is, as a developer, if you want to hear the honest views of the mass majority then you have to be the one to action it.  3 Oceans took the bold step of hitting the ground to hear people’s opinions and by taking this courageous step they were rewarded.

The weight of this community support is undoubtedly invaluable.

If you too would like to strategize about your upcoming project and how to counter the negative minority voice, then contact Sam at PropertyESP – because as many in the property sector know – this is our forte!

Appetite for additional car bays prevalent

Recent research conducted by WA Apartment Advocacy has shown that while 70% of the 174 respondents were happy with their allocated parking bays in their apartment development, an astonishing 50% would be prepared pay an additional $25,000 for another car space.

Of the 30% who were not happy with the number of allocated parking bays, the majority of these were residents with just one car bay.

We have often heard the mantra from developers that they would be happy to provide additional bays if buyers were prepared to pay for it and this data now suggests that the appetite for extra parking is in fact prevalent.

This largely stems from the fact that 50% of the respondents were still reliant on their vehicles for work, shopping and leisure and while the Metronet will alleviate this situation, it is still somewhat in the distant future.

Interestingly 15% of respondents who did live close to public transport were prepared to forfeit their car bay and save the $25,000 on their apartment price.

The data also showed that 30% of the respondents were unhappy with the allocation of visitor parking in their development, with many citing that residents were using these bays as an overflow measure.

For some time now Local and State Governments have been seeking to lower the ratio of car bays to apartments and yet the research does demonstrate that this planning move is somewhat premature.

The research also begs the question as to why developers are not seeking to sell car bays as an ancillary aspect to the apartment itself.

Further improvements that residents were seeking to their parking woes included electric car charging points, dedicated car washing/cleaning bays, larger parking spots and greater security.

This research – if nothing else – clearly shows that developers need to be researching their buyer’s needs before making any assumptions.  This will undeniably assist with their own design process as well as overcoming imposts by planning regulators.

If you are interested in hearing more about WA Apartment Advocacy and its research results register at www.waaa.net.au.

 

Perth does offer apartment choice

PropertyESP just completed some research on behalf of the Property Council examining the number of 3+ bedroom apartments located in the Perth LGA.

Contrary to popular belief, PropertyESP actually identified 1135 sales of 3+ bedroom apartments from 2012-2017, with the bulk of these in East Perth (697).

But other locations including Crawley (134), Perth CBD (127) and West Perth (134) also reflected these larger apartments.

But what we also witnessed was the decline in sales for these larger apartments with 279 sales recorded in 2012 and just 95 in 2017.

It makes us wonder if this decline is due to these apartments being tightly held onto or alternatively a lack of supply?

Over 900 of these sales were also apartment houses in contrast to penthouses or home units and interestingly it was these apartments that reflected an increase in median price from $690,000 in 2012 to $860,000 in 2017.

On the other hand penthouses which were selling at a median price point of $1.7 million in 2012 are now selling at $1.5 million and home units (smaller complexes without lifts) which had started at a median price point of $534,000 in 2012 were priced at just $477,500 in 2017.

12 Jan blog

However, considering trends with baby boomers and the family sector, apartment developers will have to consider increasing the ratio of three bedrooms within the City, beyond a token gesture.

Data has shown that Perth is second to Sydney across the nation for the number of families residing in apartments.

Plus nationally only 5% of our seniors in fact choose a retirement village when looking to relocate out of their traditional family home.

Perth is evolving and people are choosing to reside in the City because of its strong employment base and vitality (as a result of improved infrastructure) and on that basis we need to reflect this in our ongoing housing options.

If you are seeking this kind of intelligence (and who wouldn’t?) then contact the team at PropertyESP.  We make sense of property.

Apartments transform suburbs – and for the better!

Curious to see what has happened with the recent 2016 census, PropertyESP took a look at 3 suburbs that have been transformed by apartment developments to see what other changes to the suburb this had brought.

East Perth – originally an industrial suburb, EPRA (now MRA) was established in 1991 to redevelop and urbanise the suburb.   It did so with the development of Claisebrook Village, with introduced 1450 new dwellings as well as retail and commercial properties on the site of the former East Perth Gasworks, scrap yards, contaminated industrial sites, empty warehouses and railway yards (Source: MRA Claisebrook Village Fact Sheet).

In the 2001 Census of Population and Housing, East Perth (which is broader than just Claisebrook Village) had 1631 occupied private dwellings that were apartments and flats (making 81.2% of all occupied private dwellings in the suburb).  By 2016, this had risen to 4018 apartments and flats (88.8% of occupied private dwellings).  The big transformation of East Perth occurred between 2006 & 2011, with the addition of 1160 occupied private dwellings that were apartments and flats (a 67% increase), and between 2011 & 2016, with the addition of 1125 occupied private dwellings that were apartments of flats (a 39% increase).

What else changed in East Perth over this time?

  • There was a change from these apartments and flats being predominantly rentals to owner occupied.   In 2006 and 2011, the level of owner occupancy was hovered around 34%.  By 2016, 64% of occupied private dwellings that were apartments or flats were owner occupied.  Over the same period, the level of owner occupancy for apartments and flats in Greater Perth was unchanged (around 32%).  With the redevelopment, people are choosing to own and live in apartments and flats in East Perth.
  • Median household incomes for the suburb have surged ahead of Greater Perth.  In 2006, the median household income for East Perth was $1106 per week … on par with the $1086 for Greater Perth.  By 2016, median household income for East Perth had risen to $2301, well ahead of the $1643 for Greater Perth.
  • The types of households attracted to the suburb has changed.  In 2001, 46% of East Perth households were lone person households and 29% were couple households.  By 2016, the two were on par – 37% lone person households and 36% couple households.  Both groups have remained relatively stable across Greater Perth over the same period.  Whilst families have not been attracted to East Perth in droves – they currently make up 16% of households – they have risen in number, up 251% from 210 households in 2001 to 737 households in 2016.

Burswood – another older suburb that gained new life and widespread awareness with the building of the (then) Burswood Casino in the 1980s.  The suburb was officially gazetted in 1993.  Subsequent apartment developments in a similar vein to East Perth have continued to change the suburb but it’s location on the eastern bank of the Swan River provides for a different lifestyle experience to East Perth.

The 2001 Census of Population and Housing counted 187 occupied private dwellings that were apartments and flats (making 37.4% of all occupied private dwellings in the suburb).  By 2016 this had risen 183% to 530 occupied private dwellings that were apartments or flats.  More importantly, this changed the housing profile of the suburb, with 57.2% of occupied private dwellings being apartments or flats.  The really big transformation in Burswood occurred between 2006 & 2011.

What else changed in Burswood over this time?

  • As was observed in East Perth, there was an increase in owner occupancy of apartments and flats in the suburb.   In 2001 and 2006, the level of owner occupancy was hovered around 21%.  This rose to 36% in 2011 and 41% in 2016.  Apartments and flats in Burswood are still the domain of renters, but it has seen a doubling of owner occupancy levels over 15 years.
  • Median household incomes for the suburb have surged ahead of Greater Perth.  In 2006, the median household income for Burswood was $1091 per week … on par with the $1086 for Greater Perth.  By 2016, median household income for Burswood had risen to $2273, well ahead of the $1643 for Greater Perth.
  • The types of households attracted to the suburb has changed as well.  In 2001, 38% of Burswood households were lone person households and 31% were couple households.  By 2016, the situation has reversed – 30% lone person households and 38% couple households.  The proportion of family households has also increased, up from 18% in 2001 to 23% in 2016.  In numbers, they have risen 14% from 87 households in 2001 to 213 households in 2016.

Cockburn Central – the first purpose built TOD in the Perth metro area.  It was named in 2007 and was counted as a separate suburb for the first time in the 2011 Census.  The 2016 counted 403 apartments or flats as occupied private dwellings, making up 70.8% of the 569 occupied private dwellings in the suburb.  At 10 years of age, there’s not much  history or transformation to explore.  But as a purpose built regional centre for the surrounding area and designed with density and connectivity in mind, it serves as an interesting comparison to the other suburbs.

Firstly geography, Cockburn Central is 24km from the Perth CBD, connected by the Kwinana Freeway and Transperth rail.  That makes it further from Perth than East Perth and Burswood.  It has a number of employment opportunities close by, and is also well placed to connect to employment opportunities in the Perth CBD and the SW metropolitan industrial areas.

Who is living in Cockburn Central?

  • Cockburn Central is very much a renters suburb.  At the 2016 Census of Population and Housing, 71% of occupied private dwellings that are apartments or flats are rented, higher than for Cockburn Central properties in general (58%).   The level of renting is higher than for Greater Perth.
  • Median household income for the suburb is similar to Greater Perth – $1625 per week.
  • 37% of households are lone person households (similar to East Perth), 34% are couple households (lower than East Perth but, like East Perth, the proportion of couple households is growing).

With the newness of this suburb, it does tend to however indicate that it may follow the same pattern as Burswood and East Perth in time.

As PropertyESP has always attested – apartments in the housing mix does tend to attract a more professional resident with higher disposable incomes and that is good for the LGA overall.  If you would like to know what is happening in your suburb of development contact Sam Reece at info@propertyesp.com.au.  We love to get into the nitty gritty!

Burswood premium continues

PropertyESP will be releasing a media statement this week after examining the Burswood apartment market from 2013-2017.

While overall the median price for apartments in this locale has grown by 11% from $700,000 to $780,000, it is the fact that this growth has occurred across all bedroom configurations that makes it even more interesting.

One bedroom increased its median price point by 6% in these four years, two bedroom 17%, three bedroom 14.5% and four bedroom 8%.  This contrasts to other apartment nodes nearby.

Plus in this time frame only 16 properties resold and when you see property being held onto this tightly then there tends to be an indication of high satisfaction and a sense that more growth is anticipated.

The sales data also demonstrated Burswoods’ preference for larger apartments with 21% three bedroom apartments sold in the four years, in comparison to its counterpart in Rivervale which sold just 13%.

There are calls from some Councils that apartments in fact can dilute the premium brand of a suburb – but in this case it is quite clear that Burswood not only has established this solid reputation but also maintained it.

Plus with the Stadium finishing and the Burswood Peninsula Precinct Plan on the horizon, this suburb will only continue to grow in value.

If you like the way we look at data – then let us have a look at your suburb.  Unlike Eastern States companies, PropertyESP gets into the nitty gritty and we look at the long term – not just the last quarter.  Because the devil is in the detail!