When numbers are misleading

When the new month rolls around, there’s a rush to comment on housing values and sales activity.

However we at PropertyESP have decided to outline why calling the market, a few days post month, can sometimes be somewhat rash.

Case in point, we recently took a look at Maylands sales for the month of May 2018 – reported as settled as of 30 June 2018. As can we seen – you would have been led to believe that there were 2 house sales and 3 unit sales.

Maylands sales 1 may 2018

But if in fact, you had decided to wait until 10th September to report on the settled sales for Maylands enacted in May, the data would be substantially different with 9 house sales (not 2) and 11 unit sales (not 3).  Furthermore average sales has risen for a house from $547,500 to $630,000 and fallen from $320,000 to $315,000 for a unit.

Maylands sales May 2018

Looking at settled house sales for May as at the end of each month from June 2018.

maylands sales 2 may 2018

And unit sales over the same period.

maylands sales 3 may 2018

So why do you have this variation in price between properties in suburbs within such a short time frame?  Because the median price depends on what is being sold – so if a number of one-bedroom flats are sold, then the median price will naturally be lower.  And the same for the sale of premium 4 bedroom homes, with regards to inflating the median price.

Data can change the entire forecast for an area – and that is why you have to make sure you are looking at the entire picture!

At PropertyESP we always like to look at the nitty gritty and longer term – plus we only report on WA.  And that is what makes us unique! Call Sam today on 0452 067 117 to talk property and see what we can reveal for your suburbs!

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Strata survey shows satisfaction with fees

Research conducted with 150 apartment owners this month by the WA Apartment Advocacy has shown that 69% believe that the strata fees they are paying represents good value for money.

The respondents to the survey were from a wide range of demographics with annual salaries ranging from under $40,000 right through to over $130,000 and with apartments located from Kwinana Beach right through to Hillarys and as far East as Armadale.

Typically those with higher incomes were paying over $1000 per quarter in strata fees, with the bulk (39%) paying between $500-$1000/quarter.

Ms Reece Director of WAAA stated that interestingly it wasn’t until residents were paying over $500 per quarter did they start to have amenities in their development such as a swimming pool, gym and entertaining precincts.

“What the research demonstrated was that while 48% were happy with paying the current strata fees, 48% would prefer to pay less and as a result have less amenity,” Ms Reece said.

“Our state wide research conducted in 2017 verified that only 30% of residents were utilising amenities such as a pool or gym in their apartment development.

“However an additional 20% enjoyed knowing it was there, even though they were not accessing the facilities.

“It is important that when people are considering an apartment and the associated strata fees, that they are realistic about what amenities they are going to use and the frequency of use, before they commit.”

But as Ms Reece stated, most people did not look at strata fees in comparison to maintaining a home.

“Our research has shown that when you are considering the costs associated with a home’s maintenance and insurance, maintaining a pool, paying for gym membership and the like, in most instances the fees associated with strata management are more cost effective than owning a traditional home,” Ms Reece said.

“I am sure if you were to add up all the Bunnings receipts over a year you would be surprised and shocked about the expense and time it takes to maintain your average home.

“At the end of the day strata fees should be seen as an investment in order to maintain your asset so that it represents well at the point of resale and consequently buyers need to think of the long term when reflecting on strata fees.”

If you found this research interesting than maybe we can help uncover something unique about your projects?  If you would like to talk further than contact Samantha Reece on 0452 067 117.

 

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.

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.