East Perth – PropertyESP

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!

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!

House Price Slump? … The Devil is in the Detail

Just before Christmas, there was an article discussing how house prices had slumped and there was an increasing number of home owners who were selling their property for lower prices than they’d bought them for. In a market where the median house price is declining, there is an increased likelihood of this happening, however the majority of sellers would have been making a profit and, as the same article noted, some are making quite substantial profits.

At PropertyESP, we like to delve into the detail to gain real insights.

Last year we posted blogs on residential sales trends in East Perth (analyzing 22 years of sales), Ellenbrook (23 years), the suburbs surrounding the Cockburn TOD (23 years) and the suburbs surrounding Fiona Stanley Hospital (12 years).

When we look at that volume of data, one of the most interesting pieces of analysis is to look at resales – when a property has been sold multiple times in the time period. This gives us the true value of price trends in an area.

Before we do that, we need to weed out the dodgy data or analyse them separately. There’s always a number of sales where the increase or decrease in sale price is influenced by other factors (e.g. renovation, divorce, subdivision) so that the sale is not a reflection of the true market value. When analysing resales, it’s important that the property is essentially the same each time it is sold (PS no other company weeds out this data before doing the analysis).

Having flagged those properties and removed them from the data, our analysis identified a number of interesting trends in resales.

Firstly, the vast majority of properties increased in sale price between sales. The increase in price ranged from 89.3% for apartment houses in East Perth that were resold between 1992 and 2014 through to 97.3% for houses in Leeming that were resold between January 2003 and June 2015.

Secondly, for most of the markets reviewed, the properties that declined in sale price tended to have been held for a shorter period of time between sales and the properties that had increased in sale price tended to have been held for a longer period of time between sales (for ease of reading the chart, we’ve removed the average time between sales for properties that did not change price between sales).

When we looked at this data across all of the suburbs, we noticed that there was a magic number of 8 years. Properties that were held for 8 or more years between sales increased in sale price; none declined in price. In contrast, 8.3% of properties that were held for just up to 5 years between sales, declined in sale price.

And this 8 year point held true in all of the markets we examined and, in some markets, was actually lower – 7 and 6 years.

This makes sense in the context of the generally increasing long term residential property prices across each of the markets reviewed, but with the occasional decline from one year to the next.

However, this 8+ year sweet spot will only hold true in the context of the trends observed in the Perth residential property market. If those trends change, for example long term instability or decline in prices, the vendors would need to hold on longer between sales, to achieve growth in sales prices.

And there are other more localised factors that can also affect the time required to achieve growth in sales prices. Small area speculation (such as the impact of the mining boom and decline on Pilbara property prices); a change in buyer preferences for house type (such as a change in preference from Federation houses to modern houses which reduces the premium price certain styles of property will attract in a local area) and the introduction or removal of key employment generating infrastructure (such as we recently blogged about on the impact of Fiona Stanley Hospital) will all impact on the time it takes for a property to grow in value.

But the good news is that the market is not as dire as you may first assume!

And as always – you can’t speak broadly about the Perth market as some analysts do, because it is quite clear that once you get into the nitty gritty there are some good news story to be told!

PropertyESP we make sense of property!

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.

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!

Foreign investment continues to grow

So following on from the Multi Unit Conference, another speaker at the event was Joanne Chin, formerly of Colliers.

Joanne spoke of the increase in FIRB purchasers, with some development projects showing sales as high as 40% attributed to foreign investment (average was 5%).

These purchasers were local students, overseas residents anticipating relocation and then also foreign investors.

Typically these purchasers were seeking projects in Northbridge, East Perth and CBD.

Joanne made the valid point that some projects in the CBD were ideally suited for overseas markets.

It is worth therefore assessing if your project meets this criteria, before entering into this marketing realm, as it can be a very expensive exercise.

Certainly food for thought!

PropertyESP is a research and analysis company that makes sense of property. To learn more visit http://www.propertyesp.com.au

Government must plan for greenfields too!

With the Sub-regional planning framework released last week – PropertyESP has something to say about planning for greenfields sites!

Independent property analysts, PropertyESP have released results this week after the company undertook research of greenfields sales as well as infill, over a two year period (October 2012-October 2014).

The company examined key areas such as Byford, Baldivis and Ellenbrook in comparison to Victoria Park, Belmont, East Perth and Midland as part of the overarching study.

The company found that demand for land lots in the greenfields areas ranged from 982 blocks to 2256 for the two year period (average 1557) in comparison to 712 apartment sales in East Perth (the highest volume).

Samantha Reece, Director of PropertyESP stated that while demand for infill was certainly increasing, demand for greenfieds lots was still a significant factor when planning land supply.

“The research found that the buyers of infill properties versus greenfields were two very different groups of people,” Ms Reece said.

“In addition the purchasing patterns of these buyers indicated that Greenfields buyers were highly unlikely to become owners of infill properties.”

The research discovered that house size was also a major player in the purchasing decision.

“Whether they purchased in greenfields or infill, the purchasers were still looking for an average of one bedroom per resident and as such families were seeking 3-4 bedrooms while baby boomers and Gen Y were seeking 1-2 bedrooms.”

But as Ms Reece observed, the terminology of infill as being a solution to affordability was also a misnomer.

“When we examined price per square metre for townhouses, apartments or even blocks of land, the price indicator demonstrated that infill was consistently more expensive across the board,” Ms Reece said.

“While there are many gains for purchasing an infill property, it is certainly favoured by a select group of residents and as such planners must recognise the need to continue to offer choice options for the market.”

The full research results will be presented to a UDIA function on Friday 15 May. To find out more or to book contact UDIA on 9215 3400.