Perth economy – PropertyESP

700 is the magic number (Part 2)

Following on from our previous post re Colin Keane’s land report, we will now explore what is happening across Perth’s corridors.

At present there are 165 active estates in Perth achieving an average of 3 sales per month. At our peak in the mining boom this rate was 8 sales per estate. We are currently selling at 17% capacity and again at our peak we performed at 60% capacity. And we will need to see 1300 sales/month before we will see prices improve (which is double the 700 that Colin Keane is suggesting we should be aiming for).

The North East corridor is the best performing sub market with 25% of all activity across Perth. There is currently 129 lots sold per month but it ideally should be selling 175 lots and as such is 26% below capacity. At present, capacity is in line with target and hence when the market returns to normal, this will be the first sub market to perform well.

North West Perth represents 20% of the market share and this is linked to its proximity to the coast. Its monthly target is 140 sales and this corridor is currently achieving 89 sales pcm. On this basis this corridor is performing 36% below target. However unlike the North East, this market is 159% oversupplied.

South West (Baldivis) also represents 25% of the market share. With 120 sales pcm and a target of 175 sales/month this corridor is performing 31% below target. This area however is the worst oversupplied with 302% excess capacity (currently 1257 lots on the market).

The South East sector also represents 25% of the market share and 102 sales pcm and a target of 175 sales per month. Performing 42% below capacity, this market is also reflecting 242% excess capacity with 625 lots on the market. This area is also overvalued by $7000 on land prices.

And finally Peel represents 5% of the market share with 21 sales pcm and a target of 35 sales per month. Performing 40% below capacity, this area has 324 lots on the market and hence representing 463% excess capacity. Land in this corridor is also $20,000 overpriced.

It is quite evident that if we can attract the 1000 people per month than this will have a significant influence on the health of our land sales and this is now our crucial focus.

While Colin stated we didn’t have to worry about overseas net migration, what we do need to do is cut our interstate migration by 50% (from 3000 people moving to the East to 1500) and this would have the desired effect we need.

But until we reach that target of 1000 people per month, the Perth land market will continue to face challenges and more so in the South West and Peel regions. If you hold land in these areas, then you need to be considering innovative marketing strategies to stand out from the competition. The good news is that PropertyESP is renowned for our marketing prowess, so contact Sam today on 0452 067 117 and we will troubleshoot your sales!

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!

Women are taking over the world (did you get the memo?)

After a number of recent events including International Womens’ Day, PropertyESP Director Samantha Reece thought she would share some insights into how women are forging ahead with property ownership.

“Westpac’s annual Home Ownership Report recently revealed that women are overtaking men when it comes to home ownership.

A survey of more than 1,000 Australian home owners and first-home buyers found that women are ahead of men in most categories:

more women have bought a home to live in (women 28 per cent of survey respondents compared with men 20 per cent)
more women have bought an investment property (16 per cent compared with men 13 per cent)
more women are renovating (29 per cent compared with men 27 per cent)
and more women are selling a property (17 per cent compared with men 14 per cent).

The report also found that more women than men ‘strongly believe’ that ‘owning your own home is a reflection of your success in life’ (up 26 per cent on last year) and that ‘property is a pathway to wealth’ (up 10 per cent on last year).

Female first-home buyers were twice as likely as men to consider good investment potential in a home as essential (35 per cent vs men 18 per cent), and were also twice as likely to consider buying an investment property in the next five years (22 per cent vs men 11 per cent).

Overall, 71 per cent of women are ‘considering housing actions in the next five years’, as opposed to 61 per cent of men.

And data from the ATO shows the number of female taxpayers receiving rent has risen from just under 14 per cent in 2010-11 to 15.4 per cent in 2014-15. By comparison, over that period men only saw an increase from 14.7 per cent to 15.9 per cent. The ATO data also indicates that approximately 47 per cent of all investment properties are owned by women.

With an increase of 3000 females in the workforce in WA over the last quarter, it is evident that women are securing greater financial independence and hence making their own business decisions when it comes to property. This is also affected by the fact that the average age of a woman who marries in WA is now 29 and the State recorded the highest proportion of divorces nationally at 48.3% in the 2016 census.

But more close to home, PropertyESP recently conducted research with buyers of the Stockland Completed Homes and found that women had a huge influence over the final purchase. While the husbands took their wives to other houses that were cheaper and bigger – it was futile – because when these women inspected the Completed Homes, it was literally love at first sight! There were also cases where the women sourced additional income from lenders and family in order to stretch their budgets and buy what they wanted!

These trends will ultimately have an influence over how a company markets and sells their properties – especially on a face to face level in the sales office.

The question is – are you ready for this new wave?”

WA has every reason to be feeling confident

Samantha Reece, PropertyESP Director recently spoke at the Perth Property Expo about why the West was the best investment option nationwide.

In preparation for her dialogue, Samantha undertook her usual research and found some very interesting facts:

In the 2016/17 year iron ore revenue from WA increased by 31% to $67.3 billion
In the same period gold broke the 200 mark, which hasn’t occurred since 2000/2001 – selling 205 tonnes
Tourism grew by 1.3%
Building approvals increased by 27% from just August to September 2017
Unemployment rate fell to 5.7% on par with the nations average
Consumer confidence has reached an all-time three year high
And 30% of the population believed that the economy would strengthen in the next year while 41% believed it would stay the same

This coupled with the avalanche of new infrastructure, about to descend upon Perth including:

$65 million Yagan Square
$400 million redevelopment of QV1, Forrest Chase and Raine Square
$1.6 billion Perth stadium
$500 million Canning City Centre and Carousel expansion
$2.65 billion Metronet
$200 million Murdoch medical precinct
$235 million Canning Hwy/Bridge redevelopment

And there is no doubt that that Perth is about to transform from a City, into a cosmopolitan capital.

Certainly in ten years Perth will be entirely different City and its evolution will create more opportunity and diversity.

We however, need to be aware of just how much WA has got going in its favour – and while it can not compare to the 2011 boom time – it is certainly showing signs that are extremely positive – and it is this good news, that we should be celebrating publicly! Spread the word!

Where does suburbia fit into the Perth equation?

PropertyESP recently attended the PIA State Conference which was aptly termed “Rocking the suburbs.”

Minister Rita Saffioti opened the conference and posed the question – does every suburb wish to be rocked and went on to explain that in the East, the focus in the 1990’s was all about the inner ring and that suburbs were seen nearly as a second class choice.

In contrast – Perth is the exact opposite – even some 27 years on.

Our population growth certainly has been part of the reason for this evolution with some residents happy to travel over an hour into the City for work while living in our burgeoning outer suburbs. This is true regardless of age.

But what is evident in the Eastern States, is that now, some three decades later, the inner city is reserved solely for the wealthy.

Interestingly 83% of lawyers work in our CBD, 62% engineers, 39% white collar professionals and 26% health workers – however this is not reflected in their choice of housing suburb.

This is partially because house sizes have not declined drastically and yet the range of housing choices in the CBD continues to cater for 1-2 person households.

The Minister therefore believes that we will see a shift whereby suburbia will become more like business districts and the City will evolve into an amenity district. This certainly aligns with their Metronet model.

At PropertyESP we believe that Perth will follow the same pattern as the East, with the CBD becoming a desired location over the next decade. But first we need to see greater choice of housing and added amenities such as schools in order to cater to a broader cross section of the community.

But on the tail of that, there are many suburbs that were established in the 1970’s to 90’s that really do lack any sense of pulse and hence in order to retain their residents, their Councils will also need to be progressive in the provision of services and development of community spirit.

There is no doubt that Perth is in a flux of change and as a result of significant investment in the inner CBD and key suburban shopping centres, we will see the rise of preferred suburbs over the next 5-10 years. But that also means that there will be many suburbs that languish.

The question is, are the LGA’s prepared to rock the boat and their suburbs and evolve with WA’s changing needs?

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!

Appetite for change is on the horizon

PropertyESP recently attended the Perth Cities Summit co-ordinated by John Carey Member for Perth. With over 350 people in attendance, everyone was seated randomly and provided with 35 ideas that had been derived from the previous workshops hosted in Northbridge, East Perth and West Perth.

These ideas included a variety of themes which aligned with PropertyESP’s agenda including:

Revitalise Heirisson Island as an indigenous cultural hub
Create Renew Perth to activate vacant properties
Ensure a full year long events and activation plan for the City
Establish the role of Night Czar or Mayor to drive night time economy
Facilitate the construction of a cable car from Elizabeth Quay to Kings Park
Cut red tape around use of the Swan River to create more life and vibrancy
Establish Perth as a canopy city
Abolish al fresco and street activation fees for small business

However at the end of the session the top five areas which the attendees chose included:

Partner with Noongar people to recognise indigenous culture and history in the City (33%)
Establish Perth as a canopy city (21%)
Create Renew Perth to activate vacant properties (19%)
Set an ambitious population target backed by innovative planning (17.8%)
Establish Perth with clear community precincts backed with precinct planning (9.2%)

While the final results have not been released – it was clear from a number of people on our table, and the panel, that there was a need for action rather than ongoing planning which only ultimately creates inaction.

And as Marion Faulkner from Committee of Perth stated, we as a city need to embrace a state of mind that is can-do.

The fact is, 350 people attended a session on a Saturday morning because we are passionate about change – and change for the better. But in fact all of us need to now invest in our City – if not with financial contributions then at least our energy.

And now is the premium time with the suite of infrastructure projects that will be delivered in 2018.

PropertyESP urges the people of Perth to no longer be passive – but rather passionate about how Perth can grow – and how we can catalyst change. The question is – are you up for the challenge?

Night time economy part of WA’s future

With all the inner city development occurring, a colleague of PropertyESP recently attended the Australian Night Time Economy (NTE) conference in Melbourne.

This conference dealt with the fact that the night time economy, which for so long has been associated with bars, restaurants and adult entertainment in fact was evolving and in the UK this economy represented $66 billion in trade alone (or 6% of GDP).

Closer to home, Brisbane’s NTE grew by 25.2% from 2009-2014 from $4.97 billion to $6.231 billion.

With changing work habits, multicultural diversity and in fact a 24 hour global clock, we are less and less inclined to think that night time is just for hedonistic activities.

But this means that if we want to transform some of our City into true night time economies we need to think across planning, place making and regulation.

This means that we need to consider pop up markets in car parks. And temporary installations. And be more liberal with parklets.

This also means that we need to entwine our fashion, food and entertainment outlets and more so be open for custom.

That means that sometimes we have to take a risk and in fact subsidise these concepts to allow for creativity and sense of destination.

With so many areas undergoing rejuvenation in Perth at present – this is the perfect breeding ground for innovative night time solutions.

The question is – are we going to seize this opportunity?

The team at PropertyESP dare you too! The time is certainly ripe for disruption!

Desire for East Perth to gain 24/7 heartbeat

Samantha Reece recently attended the East Perth session of the Cities Summit that has been co-ordinated by Member for Perth John Carey.

Over 60 people attended this session which comprised of businesses, developers, residents and interested parties.

Quite predictably the session dealt with the areas strengths, its problems and what the community would like to see occur.

East Perth was liked because of its walkability, the gardens and open spaces, Claisebrook Cove and the fact that the area felt calm and relaxed. In particular the residents enjoyed the fact that while they were living in the City it felt like they were in fact residing in a suburb.

However, there were certainly rumblings about the impact of foot traffic once the Stadium was completed and inexplicably this turned into concerns about safety.

But what was very clear was that East Perth has a Monday-Friday, 9.00am-5.00pm heartbeat and hence outside these times East Perth appears somewhat of a ghost town.

Some of the residents however enjoyed this low profile stating that they could travel to Northbridge and Perth for their entertainment. But this tends to fly in the face of what a TOD (and that is the basis for East Perth) is all about.

There was a sense that East Perth was missing small bars and night activation and that the vacant business premises detracted from the overall vitality.

The community certainly wanted to activate the area around Perth Mint and also turn Wellington Square into a pleasant space to recreate in – rather than avoiding it all costs.

The audience talked about movies in the park, markets at the WACCA car park, setting up pop up shops in the vacant premises and overall a more cultural atmosphere.

This obviously has a cost factor associated with these activation strategies and while John Carey may be seeking the City to hire a place maker for East Perth – it also needs people. There is no doubt that East Perth has been undercooked for density – like Subiaco – but this is an aspect that can be rectified as we move forward.

With the Stadium due for completion in 2018 this will certainly increase flow through traffic – but will they in fact stay and recreate in East Perth? And this is very much the issue of the chicken and egg scenario. Do you create the amenity so that people stay – or do you wait for the crowd and then create the activation?

Either way – there are some real opportunities for East Perth on its horizon and this community can either embrace it – or turn their back on it. But from the conversation we observed, there is a real desire to turn East Perth into a 24/7 destination and that will take input from all parties and not just a place maker hired by the City of Perth!

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

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?