perth real estate – Page 2

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!

Freedom Fit is the new Downsizer

You may have seen PropertyESP’s Director Samantha Reece on Channel 7 News Wednesday evening talking about the concept that she has hatched – known as Freedom Fit – under the WA Apartment Advocacy banner.

After conducting recent focus groups with seniors, Samantha found that when baby boomers moved to an apartment – while they were downsizing the living space they used – they were not downsizing on their mortgage or their lifestyle. Hence the common term downsizer was now somewhat passe.

In fact these baby boomers knew that they would have an abundance of free time once they moved into an apartment and and hence sought locations that offered the corresponding lifestyle that would fill this time.

On that basis they sought locations that offered coffee strips, with natural elements such as the beach or river and also proximity to major hubs such as Perth or Fremantle.

In particular the apartment lifetyle also tended to be a motivating factor to encourage the residents to get out and try new activities and hence provided a new lease on life.

As a result of these findings, Samantha coined a new term – Freedom Fit – to better describe the motivation driving this older demographic.

These retirees were also keen on knowing their neighbours and recommended joint services within districts, such as a concierge service.

It was also evident that the senors in these groups were delighted with the apartment lifestyle and it is these added benefits that apartments offer over traditional retirement villages, which will now be a defining element of Perth’s evolving senior’s housing.

And what is clearly evident though is that this age group will dominate the market for a while yet – and as such we need to be conscious of what they are looking for including more living space, extra bedrooms and storage.

As the market begins to become more sophisticated with its appetite for apartments – so must our choice of designs.

Interesting times ahead!

Apartment supply update

Samantha Reece of PropertyESP recently attended and participated in the Property Council Apartment conference where Urbis revealed their First Quarter 2017 results.

At present 20% of Perth’s building approvals are for apartments compared to 60% in Sydney and 46% in Melbourne. This equates to 3797 apartments currently under construction.

There are at present 134 active apartment developments in WA and 11,194 apartments, which only represents about 10% of the apartments nationally, which tends to put WA’s supply somewhat into perspective.

There were 258 sales in the first Quarter 2017 with an average price of $650,000. These sales were primarily in the CBD and Western Suburbs. 25 of these sales were attributed to Essence apartments alone, located in Claremont.

58% of the buyers were owner occupiers while 25% were identified as investors.

2017 will be a peak year of construction with an anticipated 3200 apartments delivered. While the number of sales matched the apartments launched in Q1 2017, there will be another 800 apartments delivered in Q2 and 1200 in Q4.

Certainly the data still upheld Urbis’ prediction that there will be a shortfall of apartments by 2020. This is primarily because not all projects will proceed to construction phase.

This data also aligned with REA’s research which showed that the top suburbs searched for apartments were as follows:

East Perth
Perth
Rivervale (The Springs)
South Perth
Scarborough
Fremantle
North Perth
Burswood

There is no doubt that Perth is still far behind the other states in terms of apartment supply – but it also shows that demand is relatively strong and more so now from the owner/occupier market than ever before.

Certainly the next 12 months and commencement (or non) of a number of projects will impact on these forecasts and hence it will be an interesting market to observe.

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?

Flight to bigger apartments evident

The first poll research of its kind in WA, with 268 apartment residents (owner occupiers and renters) has shown a real appetite for larger apartments.

The WA Apartment Advocacy (WAAA) data has demonstrated that 35% of renters moved from a two bedroom and 26% from three bedroom properties into one (35%) and two (34%) bedroom apartments. But asked what would they move into next, 48% said two bedroom and 38% indicated three bedroom properties.

This was mirrored by the owner occupiers as well, with 35% moving from a three bedroom property and 39% from a four bedroom into predominantly two bedroom apartments (64%). However, when thinking about their next move, 33% would move into a two bedroom and 53% into a three bedroom property.

The research demonstrates that the need for a third bedroom was driven by resident’s usage of the space in their apartments, with 61% of owner occupiers and 48% of renters, using a bedroom as a study or a study nook in their apartment.

For some time now, the WA apartment market has been focused on one and two bedroom apartments but this data gives food for thought to both developers and investors alike.

At PropertyESP we tend to concur with WAAA in that baby boomers should no longer be called downsizers but more aptly right sizers and up-stylers.

Why? Because these people have been typically living in their family home for 25 years and so what they are seeking is a spacious apartment with all the mod cons.

While apartment analysis to date has been focusing on what has been selling – this data tells us what the next market trend is. Those that are wise will take note!

Finally East Coast recognises Perth market upswing

Today two East Coast companies, CoreLogic and Moody’s, publicly declared that the worst of Perth’s property market was behind us and they predicted 3% capital growth for houses and 5.6% for apartments over the forthcoming 12 months.

Now for some time PropertyESP has been blogging about the upswing in Perth property prices and especially with apartments. That’s because we look at the micro while others look at the macro.

For example in Scarborough if you purchased a 3 bedroom apartment in 2011 – by 2016 you had achieved 28% capital growth.

Or in Applecross/Mt Pleasant 2016 apartment prices are now back to 2011 boom-time values.

Or even houses in the Western Suburbs (valued below $1 million and which were renovated), PropertyESP demonstrated they achieved 21% capital growth/annum (despite what was reported in the media).

Plus analysing apartments in Churchlands and West Leederville, we were also able to demonstrate property growth from 2013 – 10% and 2% respectively.

But regardless of what a WA analyst says, it appears that we need the nod of approval from the East before we actually believe the good news!

Despite our level of cynicism for our Eastern States counterparts, PropertyESP is still glad for this national endorsement as it may actually infuse a sense of optimism with WA buyers and that is good news for the industry overall.

If you would like to see a WA company provide detailed analysis about your suburb of choice then contact us for a chat. We make sense of property – and we are proud of it!

Applecross apartments defy the norm

We recently conducted some research on behalf of a client of ours examining what was happening in the apartment market in Applecross and Mt Pleasant from 2011-2016. This data was very interesting because despite having some initial setbacks, these two suburbs have once again rebounded.

Looking at 164 apartment sales in the five year period, the analysis showed that the median sale price in Applecross in 2011 was $875,000 and peaked at $1,250,000 in 2014 before settling at $1.1 million at the end of 2016.

Mt Pleasant apartment sales on the other hand started at median price point of $1,125,000 in 2011 before plummeting to $660,000 in 2013 before then rising again to $1,195,000 in 2016.

The data also demonstrated that regardless of one, two or three bedroom apartments, there was an upswing in the median property price for both Applecross and Mt Pleasant in 2016.

But what was most surprising was that being on the rivers edge (no road in front) or river front (with a road in front) reflected no price difference and as such we believe that this a paradigm that will definitely shift in years to come with the $235 million Canning Bridge redevelopment.

The data also demonstrated that rental yields were approximately 4.2% for apartments compared to 3.3% for houses in these areas.

As you can imagine this company now has good news to share with its buyers and that will only build confidence.

If you want to know what is happening in your suburb than contact the team at PropertyESP. We delve into the nitty gritty and unveil good news!

Renters seek more

The WA Apartment survey – the first of its kind in WA – recently interviewed 113 renters who have shown that while apartments are their preference, they are seeking more in terms of amenities and space.

The survey showed that 39% moved from a house into an apartment and went from 2-3 bedrooms to 1-2 bedrooms.

However when asked what they would choose next, while 73% said they would consider an apartment, their preferences were clearly for 2-3 bedrooms. This linked to the fact that 20% were using a bedroom as a study/home office.

Convenience was also a major driver when choosing an apartment, with 91% of the renters in walking distance to public transport, 90% to cafes, 86% to a grocery shop and 84% to services such as hairdressers.

Renters also tended to look first for apartments in Perth, East Perth and West Perth before then expanding out to encompass Mt Lawley, South Perth, Highgate, Subiaco, Leederville and Northbridge. This was because most renters wanted to have a direct route to work, with 86% stating the travel time to work influenced their decision when choosing an apartment.

84% also indicated that safety and security was a major influence in their renting decisions along with being able to lock up and leave, low maintenance and affordability (75% respectively).

However what was also interesting, was that while 44% had no prior experience living in an apartment, 82% would still recommend apartment living.

There is no doubt that apartment living is becoming an evolving trend for renters, but just like owner occupiers – bigger is better!

If you are keen to learn the full results of the WAAA survey (and guarantee your investment success) contact Samantha Reece on 0452 067 117. You can be assured you won’t find this level of information anywhere else!

Compare the data – the devil is in the detail

We had a client contact us the other day with a Realestate.com report and asked us how our services compared.

The report provided this snapshot for unit sale prices:

Now for those of you who know Landgate – when they use the units classification that includes townhouses, duplexes, flats and also apartments.

But when PropertyESP looks at sales for apartments – we take away the rest of the data that is not relevant and then we get graphs such as these:

And this:

Or this:

Or even this:

The question is – what data gives you more guidance? Our data analysis is priced according to the number of sales records we review. So if you have 250 sales to look at the price is $750. If there are 500 sales then $1500, 750 sales $2250.

If you are serious about understanding the market and what is happening in your locale an investment of $2250 will give you the data you need to configure your next development and set the pricing. Basically – it guides you on what is selling, in which location, so that you can build a development that will sell (rather than having apartments that you can’t shift).

It is all about the detail and that is what PropertyESP does best!

If you would like to know more contact Sam Reece on 0452 067 117.

Real estate gurus optimistic about WA’s market

PropertyESP attended the WA Business News Property Outlook breakfast last week which showcased Hayden Groves (REIWA), Paul Blackburne (Blackburne), Vivien Yap (Acton) and Michael Workman (CBA).

Hayden Groves started the session by outlining that the 2016 median price was once again on par with 2007 and that the premise that WA property doubled in value every 7 years was no longer the new norm. The median house price in Perth is now $525,000, unit price $420,500 and land $258,500.

There were 31,000 property transactions in 2016 which compared bleakly to the peak in 2013 of 60,000. In addition during the iron ore peak, there were 1500 people migrating to Perth per week which now compares to 139 persons/week.

However despite these adjustments, there was a 2.2% increase in property prices in the last quarter for the central region and it was this figure that gave the REIWA President a glimmer of hope. As he said himself, he can’t wait to report on an increase in property prices over two consecutive quarters as this will be the good news he believes which will restore consumer confidence.

While property listings peaked at 16,000 in November 2016, as of the 7^th February listings had dropped to 14,700 and this was also a good indicator that the market was stabilising.

It is currently taking approximately 62 days to sell a house and 73 days for a unit, but this is also expected to decline by the end of 2017.

On the rental side there has been an increase in availability of stock by 68% in the last two years with 10,500 properties currently available for rent.

REIWA believes that 4000 rentals on the market is the ideal position for market parity (which was achieved in 2014) but with ongoing population growth this figure has now grown to 6000.

It is taking 50 days to lease a house and 54 days for a unit. Current vacancy rates are at 6.4% with median weekly rent at $368 (down $37 per week from the peak).

Paul Blackburne reinforced that they were receiving about 200 enquiries per month for their apartment projects but that conversion rates were still low. While Vivien Yap also agreed that interest from buyers had grown approximately 15% and she quoted, as an example, a Floreat home where they were expecting 26 groups to view and instead received 84 visitors.

There is no doubt that the consensus is that buyers are now savvier and better educated and they are undertaking their research before venturing into the market. With this in mind, sales agents need to be equipped to not only educate but convert.

But the one thing we did take away from this session was the obvious flight to quality that we are seeing across all sectors.

Groves quoted that there were currently 500 homes for sale in Baldivis and it would be our opinion that the outlying suburbs that tend to attract first home buyers would also be experiencing the same level of oversupply, especially as the FHOG only applies to new homes.

In addition anyone trying to sell or rent a 1970’s Maylands apartment, with all the new stock that is on hand, will find the current market challenging.

Similarly in the commercial sector there is a preference for new stock over old and you may need to now consider upgrading or renovating your older property in order to compete effectively.

However a word of caution – the numbers quoted at the breakfast where just the median – they do not reflect the case across all suburbs and to assume so is dangerous.

There are suburbs that are performing above the Perth median because of their location and nearby infrastructure. It is therefore essential to know exactly what is happening in your preferred purchase location before entering the market.

At PropertyESP we don’t believe in generalised statements – the devil is in the detail! So if you want to know what is happening in your suburb of choice contact Samantha Reece today on 0452 067 117. It is certainly better to be in the know – so that your choice is the best one!