How far will buyers travel?

We have been doing some number crunching for Debra Goostrey of the UDIA about how far buyers are typically prepared to travel, when seeking to purchase their next property.

This analysis is important, as I have often advised clients against advertising in State papers and focusing more on a localised marketing approach, which represents a better bang for your buck!

For this exercise we examined three greenfields locations including Baldivis, Ellenbrook and Byford.

Baldivis residents, we discovered, by far tended to move from somewhere else in Baldivis (31%).

In addition half of the buyers typically moved only 10kms when purchasing a new property. This means that they tended to move from Port Kennedy or Rockingham. The furthest buyers tended to travel was 20kms.

For the Byford locale, 20% of buyers moved from within this suburb, and then half of them moved 13kms, which was typically from Seville Grove and Armadale. The furthest they travelled was 17kms.

For Ellenbrook 34% moved from within this suburb, with half the buyers moving 15.4km, which was typically from the suburbs of Stratton and City of Swan. Again the furthest they travelled was 17kms.

Where the suburbs where more established eg Baldivis and Ellenbrook there was a higher migration within these suburbs, which tends to show that buyers in these outer lying suburbs tend to be loyal to their locale.

As you can see, it does provide substantial evidence that supply of greenfield lots is also an important part of Perth’s future growth.

This data was extracted from the 2011 ABS Census and then analysed by our team, and can be done for any suburb. So if you would like to explore your own buyer’s habits more, then contact PropertyESP and we will provide some real insights!

PropertyESP loves to research sales and property trends and then share the news through motivational speaker Samantha Reece. If you are looking for an interesting insight contact PropertyESP at http://www.propertyesp.com.au

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Housing affordability opens doors!

I attended an interesting UDIA lunch where the topic of housing affordability was the key point of discussion.

What I thought was most interesting, was that Housing Minister Colin Holt showed a map of Perth and in 2001, most suburbs, other than those within 10kms of the City were deemed affordable. In 2011, the only suburb regarded as affordable was in fact Kwinana.

Certainly home ownership is still a romantic ideal for most West Australians, but for some – it could take 11 years to save for the deposit, if your income is just $60,000/annum.

I remember my first home, which was a duplex in Carlisle and cost $95,000. We bought it with a $5000 deposit and now some 20 years on we own close to $1 million in property, with very little residual debt. It is certainly a blessing that we invested when we did, but we also were realistic about where to get started.

I had a quick look at properties below $300,000 on realestate.com and was pleasantly surprised to find that there were 205 properties in this price range, with a large portion in Maylands and surrounds.

Yes they were one or two bedroom and yes they were older buildings, but the fact is, affordable properties are still out there.

Is it therefore that we just need to be more realistic about our desires and goals?

I am currently in Hawaii on a family vacation and was discussing with some of the locals about housing affordability. And if we think Perth is expensive, we really need to re-examine other cities. In Hawaii a one bedroom, 1970’s timber home (as pictured) is rented out between $1600-$2000 per month and that does not even include parking!

And while the WA State Government is making inroads with providing initiatives such as Key Start, there are other Cities in the world, whereby Governments provide cash incentives and rebates to developers in order to build and provide affordable housing.

Yes housing affordability is a growing concern, but with all due respect, if the relevant parties were to actually think outside the box, then this discussion could actually evolve into reality.

Infill makes business cents

So we have been looking at examples of infill and the benefits its holds for small businesses and in particular service and retail.

This is especially so when we consider the increasing level of negativity that we are seeing in some Councils towards infill, as a result of resident’s action.

With the increasing proposals for density, there has been a corresponding increase in the number of action groups forming who are active, co-ordinated and aware of the approvals system (http://postnewspapers.com.au/editions/20150627/pdf/paper.pdf). While small in number, the fact that they are active, in comparison to the silent majority, means that they have had some sway with planning outcomes.

While examples in Australia were scarce, we did come across some great case studies in the USA (United States Environmental Protection Agency) which demonstrated the following:

  1. A national analysis of office and retail properties found that on a 100 point scale, a 10 point increase in walkability was associated with a 9% increase in market value and a 7% higher net operating income.*
  2. A study that classified 66 places within the Washington DC metro region found that a 19 point increase in walkability (out of 94 possible points) was associated with an 80% increase in retail sales and a nearly $7 per square foot increase in retail rents.**
  3. Walkable places clustered near others in larger walkable districts performed better than more isolated walkable places. Gross retail rents in walkable districts were nearly 50% higher and retail sales were nearly 125% greater.***
  4. In Livermore California, a $12.5 million streetscape project converted a four lane highway to a two lane pedestrian orientated main street.  In the three years following completion of the project, downtown retail sales grew 15%.****

For smaller inner city centres such as Subiaco, it is quite evident that there is a need to generate a sense of activity and vibrancy to compete against upmarket retail centres such as Karrinyup.

With the loss of the Domain Stadium, Subiaco retail in particular, will experience a significant impact with the absence of this regular influx of visitors.

As a retail business there are a number of ways you can increase revenue, such as:

  • Increase your prices
  • Reduce your costs
  • Increase the number of people who visit your outlet

It just makes sense (cents) to us at PropertyESP, that by having an increase in population, you can provide a more consistent income base, especially when you see from our other research, that infill also tends to attract professionals with higher disposable income.

We have summarised this data into a strategy for the Property Council (as Samantha is Chair of the Infill Committee) and on that basis we are hoping to activate the business community to now start becoming vocal about the benefits of infill.

I hope that you will also join us in this worthy cause!

* Gary Pivo and Jeffrey D. Fisher, “The walkability premium in commercial real estate investments” Real Estate Economics: 1 MAR 2011

** Leinberger and Alfonzo

*** Leinberger and Alfonzo

**** Dono Andrea L “Livermore California: celebrating wine country” Main Street story of the week. National Trust for historic preservation 2009.

East Perth – part d’eux

So following on from last week’s post – let’s look at East Perth in a different light.

Over the 20 year study timeframe, we looked at the census data and saw some very positive correlations with the growth of apartment residences.

Starting with the population; we saw 9% growth between 2001 – 2006, which is good news, but then from 2006 – 2011 the population grew a whopping 42%.

We also saw a 9% increase in couple households and a significant decline in single households. There were also 15% more professionals in East Perth in 2011, then the Perth average and we have seen weekly household income levels treble.

This evolution of East Perth has now created a more sought after location with greater property returns, and this was a rejuvenation that definitely needed to happen.

60% of the population were also renting in the East Perth area in 2011 and overall the residents tended to have a relatively higher disposable income.

These kind of details are important considerations, as you can imagine, as they alter what retail experiences you may provide residents and what other key amenities you might need to add.

But it is certainly a good draw card for any business who is considering opening within an area of high density, as the numbers certainly add up!

It leads us to think, what other areas can we expect to see this kind of adjustment as a result of redevelopment? Northbridge? The Springs? I guess time will only tell……

At PropertyESP, we appreciate property and exploring what is being sold and how that is changing over time.  We like to get behind the trends to see what people are buying and selling at the local level.

We share our knowledge with our clients so they can make informed decisions when developing, buying and selling property. 

Time to compete

So we are hearing in the marketplace that it is taking longer to get property sales over the line. In particular buyers are taking up to three months and in some instances visiting the sales office five times before they sign on the dotted line.

With the increased competition, especially in locations such as the Springs and East Perth, buyers are virtually able to shop around as if they were looking to purchase a car – not an apartment.

These kinds of signs tend to trigger the need for developers and sales agents alike to become more focused on what they are selling and how it outperforms any of their competitors.

However, after conducting phantom shops for a number of clients recently, we are clearly seeing that agents have in fact not changed their modus operandus.

Typically sales agents address what I call the first step i.e. they meet and greet the buyer – but what they fail to do – is the remaining three steps in the sales process!

During these competitive times – sales agents need to delve deeper with their buyers and determine their real motivations, brag about the project and then finally close the sale!

And quite frankly we also do not accept the excuse that the majority of visitors are tyre kickers!

We believe that no one visits an apartment sales office unless they are considering buying an apartment. Generally buyers just need to hear the right information (pitch) and they will commit.

We become really irate when we hear an agent say they had 60 people through the sales office – but that they were all tyre kickers and hence no sales contracts were written!

There is something amiss with this statement – and there is no guessing what it is (PS the sales agent’s motivation!).

If you – like us – are also standing around and scratching your head about why your sales staff are not gaining traction then call PropertyESP.

We are happy to phantom shop as well as work with your team to give them the rev up and go, they may need at this stage!

There are still sales being made and if you want the lion’s share, then now is the time to get off your backside and go get them!

A tale of suburb rejuvenation

So we have been watching with some interest, changes to certain precincts such as The Springs, which are transforming from typically industrial areas into stylish and enviable pockets of real estate.

We thought to ourselves – where else have we witnessed this kind of rejuvenation and what can we expect over time? So we decided to examine Claisebrook, since its rebirth in the 1990’s.

We delved into 20 years of sales results for the East Perth precinct overall and discovered some very interesting facts!

Now some people would think that we are simply barmy at looking at such a long period of time – but we love to crunch numbers at PropertyESP and make sense of property trends.

So we broke the data into several precincts including Claisebrook, East Perth, Riverside, Langley Park and the Wellington Square precinct.

Not only did we look at sales prices and capital growth over this 20 year period, but also the changing demographics of the residents plus property design trends ie number of bedrooms etc.

We saw some interesting data for this time frame and will report on them over the course of the next few weeks.

What was most interesting however, we thought, was the timeframe for capital growth.

Typically in the East Perth area, the best time to maximise capital gains was in the first year of purchase and then not again until year 8. No denying these properties posted capital growth of 13% per annum at the peak, but between years 2-7 the capital growth dipped from 12%/annum to 6%.

Typically the cycle worked in 5 year intervals.

Between sales, properties in Claisebrook experienced the better growth rate (8% for apartment houses/annum, flats 16%) with East Perth demonstrating 16% for flats and Riverside 11% for units.

There is no doubt that this area therefore did benefit from converting from an old industrial site into a modern residential village.

We wonder therefore if we will see similar results for other locations and that can only be beneficial for those early birds who recognise a good investment!

If you would like PropertyESP to present the results from the East Perth sales analysis to your team, give Sam a call today – we are happy to do so at no charge!

A new world, in our vision

I attended an interesting forum recently, hosted by the UDIA, which talked about the fact that there is often disruption, before there is evolution.

Perth itself is undergoing a period of disruption and Elizabeth Quay is a prime example of this! But we can take comfort that the pain is worth the gain!

The panel of speakers talked about a new world – that is not too far away, where automated vehicles (AV) would be the norm.

These vehicles would need a nominal driver for times of emergency, but their distinct appeal was their ability to pick up and set down at nominated destinations, hence diminishing the need for carparks etc.

This would certainly have the added advantage of freeing up large tracts of land and would also increase the appeal of public transport and TOD’s.

In addition these automated vehicles would remove any need for traffic lights, stop signs etc as they operate via fibre optics, which are already programmed into WA’s traffic system.

There are already examples of these AV’s in the United States and Google in fact, is working very hard to develop one of the first prototypes.

But as with all massive leaps of faith – there is need for change and Main Roads is already planning for their transition to this new age of transport. And while there may be some impact on employment for taxi drivers and the like, the benefits far outweigh any of the downsides.

The good news is, that as I reach retirement, I will be able to witness this remarkable transition and this concept for me is totally awe-inspiring!

If this is in our near future – I can’t wait to see what also transpires over the next 2-3 decades.