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.

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

price per annum

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).

9 May blog 11x 2

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

11 april revised

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!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robust discussion needed for infill

Samantha Reece of PropertyESP recently attended the South Perth planning workshops which dealt with the proposed train station precinct and its overall design.

Now in an earlier career path, Samantha was Director of SMR and responsible for a number of community consultation projects including the Gidgegannup town centre. But what was interesting for Samantha in this case, was that the sessions were hosted by a Council and not the developer and hence this allowed for a sharing of a range of views and hence some much needed robust discussion.

Now when the South Perth Town Planning Scheme was passed in 2013 this was done so without discussing height – but rather based on the provision of a train station.  A very dangerous move because it did not deal with the elephant in the room!

As a result, when development started in 2016 and residents were faced with 39 stories – not only did they take proactive action to stop this occurring – but the train station became a dirty word (literally).

To the credit of the Council they have decided (after many inconclusive months) to now take charge by listening to all parties.

As such Samantha was delighted to see that some of the “anti development” factions were really challenged on their assumptions while developers also had a chance to revise the mandatory plot ratio for the commercial vs residential (which at present is making a number of projects in the area nonviable).

While the planning sessions were to a certain extent very much “wish list” orientated – they did allow a forum for developers and supporters of high rise, to challenge and dismiss some of the hype that the anti development factions had created.  And no doubt by allowing for this robust and sometimes very aggressive debate, the “nay sayers” were shown to be just a marginal party in the overall context.

PropertyESP wishes to congratulate the South Perth Council because they could have taken action that would have hindered their community’s growth – and yet they took the bold move to in fact challenge people’s paradigms and hence allow for the stretching of minds and concepts. Plus they did deal with the elephant – and talked height!

At the end of the day – any decision will upset some parties – but it is the deep seated understanding that you look after a whole community (and not just the vocal minority) which the South Perth Council has heeded!  As such they have set an example for others that also need to take this bold and proactive approach.  Change will not happen by chance – but rather through leadership!

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!

 

The Springs shows robust results

It seems that not everyone is as much of a fan of The Springs in Rivervale as PropertyESP is and so we conducted an analysis of settled sales from January 2014 – June 2016 to just work out what was really happening in this location.

Looking at 348 sales in that 2.5 year period there were a number of positive points that we felt should be brought to light.

By far the two bedroom sales have been ahead of one bedroom, with 2 bedroom apartments representing 55% of sales in 2014, then 60% in 2015 and 77% in the first half of 2016.  This compared to one bedroom sales of 45%, 40% and then 23% for the same correlating periods.  This could be heavily influenced though by what is on offer.

Over the two year period, median sales price for the apartments in The Springs has been $501,000 and price per square metre of $4910.

One bedroom sales achieved a median sales price of $420,000 and two bedroom $538,000.  Despite this price variation, when you compare price per sqm it is evident that the two bedroom apartments achieve the price they do, purely based on size.

Between 2014-2015 one bedroom prices only fell by 6% while two bedroom apartments fell by just 2%.  This was also reflected in the price per square metre results.

There was also a small price premium for those properties located opposite green space and the river over those located further away.

However, just like Scarborough, The Springs is completely vanilla in its offering.  The majority of apartments sold were 2 bedroom or 1 bedroom apartments. 97% of the sales were of apartments where the apartment complex had an outdoor entertaining area and 90% a gym and pool.  As such, having the amenities such as gym, pool or entertaining area had no influence over the price per square metre between the projects.

With the area already offering a large number of apartments, any new entrants should be considering alternative amenities as well as various bedroom configurations in order to provide a distinctive point of difference.

While The Springs appears to be weathering the current market with a degree of robustness, it is evident that in order to stand out from the crowd, incoming developers need to be more creative in their offering.

It will certainly be interesting to see how The Springs evolves over the next 12 months with the opening of the 4.5 star Aloft hotel and then the stadium in 2018.

Regardless, this is a location which is sought after due to its proximity to the river, freeway, airport, stadium and casino and on that basis is a precinct to be closely monitored over the next 18 months.

Say what you want

For PropertyESP, the last couple of months have really highlighted the need to have a dialogue with the general community about what they do want to see, when it comes to infill in Perth.

After recently working with a progressive metropolitan council, we were able to reflect on their vision for their City centre and it was clear that, despite their expectations, what was being delivered by developers was not in alignment with their long term intent.

This led to a discussion where the Council admitted that while the vision was alive internally, it wasn’t publicly understood outside of the organisation.

And that led to the staff considering, just how do we sell the sizzle to our community and beyond?

Another example is Lumiere in South Perth.  This lengthy battle, which was started by a small group of residents, has finally resulted in a positive outcome for developer Edge.  However, the residents who opposed this development (which was originally at 29 storeys) are now facing the likelihood of 34 storeys instead.

It appears that with this negativity occurring towards infill, we are witnessing delivery of outcomes that in fact compromises all parties.  If Edge was permitted to proceed with the original plans, I am sure that this would have been the preferred outcome for all parties.

While it is beginning to become accepted that apartments will undeniably be a part of Perth’s future, what developers, local authorities and planners are failing to do is engage with the people who support this concept to determine what it is they want to see.  What are the design elements, materials, height, activation at the street level, etc. that are appropriate for their community?

When faced with a prejudice or ignorance, it is the role of leaders to inform, educate and encourage dialogue.  And PropertyESP believes that through this process outcomes that are acceptable to, even welcomed by, all parties can be achieved.  And while some may consider this risky, we consider this as just good community development.

If you would like to discuss this concept further than contact Samantha Reece on 0452 067 177 because she is all about meaningful dialogue!

Poll demonstrates support for apartments

The newly formed Western Australian Apartment Advocacy (WAAA) decided to conduct a poll at the Perth Royal Show last week, and the results clearly demonstrated an overwhelming 93%  support for apartments.

WAAA Managing Director Samantha Reece randomly surveyed 300 people over the course of the eight day show, and not surprisingly the majority of people recognised that Perth could no longer sprawl further north or south.

It was the first poll of its kind in WA and respondents reflected a cross section of country as well as Perth based residents, all ages and genders. In addition,of the 300 surveyed, only 12% of these were apartment owners.

Regardless of the respondent mix, the poll has however demonstrated that the majority of people believe apartments play a role within Perth and WA.

Of the 7% that did oppose apartments, this tended to be driven by misconceptions that they would end up as slums, reduce neighbouring house values or even erode the community spirit.

In conjunction, some additional verbatim comments also provided an insight into buyers desires.

Young families said that they would purchase an apartment if there was a playground/community garden at the ground level.

While older male respondents also indicated that they would like a Men’s Shed or a place where they could tinker with their tools.

Certainly having apartments near a supermarket and also transport rated highly.  But by far the strata fees and prohibitive cost of apartments were a major stumbling block for some potential buyers.

However what this feedback does tend to demonstrate is that apartment designs  now need to break the mould of just one and two bedroom configurations.

For some time now, apartments have only meet a small portion of the market (young couples and downsizers) but we are now seeing a growing appetite for apartments being driven by families as well.

From this feedback it is quite clear that the inclusion of gyms, saunas, entertainment rooms etc now needs to be rethought, in order to provide some added variety.

WAAA was commenced by Ms Reece in September, to provide a voice for apartment dwellers as well as those people who support apartments.

Its catalyst was the growing number of small vocal minority groups, who were opposing apartments, regardless of the context.

The WAAA is now seeking to add more balance to the dialogue about housing choice.

If you would like to join the discussion about apartments in WA log onto http://www.waaa.net.au and register.

 

Garbage in – garbage out

Many of you have heard of the saying “garbage in – garbage out” and it is certainly relevant to the property sector.

PropertyESP recently undertook some analysis of the North Fremantle, North Coogee and South Fremantle apartment sales from 2010-2016.

When we downloaded the data from Landgate you can imagine our surprise when 200 of the entries were coded with a land use of “other”.

But unlike other companies that would have just removed this data from the dataset, we checked each record to determine what the actual land use was. And yes it was labour intensive!

But on that basis, we were able to deliver a concise and accurate report to our client.

When generic data is published it often includes the whole gamut of sales – including some with sales prices that we call outliers.

These are generally when one party buys out the interest of another at a price that is substantially lower than the median market price.  As a result, they can distort this data.

While it is a time consuming exercise to validate the data of all the “garbage,” at the end of the day including those sales that are not accurate will affect the final analysis and this then is more the concern.

At PropertyESP we take the extra steps because we believe good data in – good data out and that is what ultimately guides our clients’ decision making!

If you would like to see how we make sense of property contact Sam Reece on 0452 067 117.

A new look at the Mandurah Train Line TODs … the apartment living options

Those of you who have been following the PropertyESP blog for a while know that we have an appetite for TODs (transit-oriented developments) because of their economic impact.

So we decided to take a look at two TODs on the Mandurah train line, in Cockburn Central and in Wellard.

Wellard is the site of Perth’s first Mandurah line TOD, but like nearby suburbs it started with a focus on houses.

The Cockburn Central TOD however was established with apartments and home units in mind, and the first home units came onto the market in 2008. Wellard followed suit with its first units sold in 2012.

Home units are the more popular accounting for 72% of the units sold from 2008 onwards. The bulk of the other options were apartment houses.

What’s the difference between the two?  Home units are completely self-contained and a better standard than flats (which are rarely built these days).

Apartment houses on the other hand, are considered more luxurious and have more amenities.

Two bedroom apartments and home units dominate the Cockburn Central and Wellard TODs… with 40% of sales since 2008 being of 2 bed-2 bath-1 car park and 25% being 2 bed-1 bath-1 car park.  17% were 1 bed apartments and home units.

The dominance of the single car park is a reflection of the property being close to the train line, with good access to the City, but may not reflect the reality of living 10-14km from the beach.  In fact, more than 80% of the properties sold had room for only one car.

But with more train stations coming online, we can expect to see more TODs and more developments that will take full advantage of these transit links.

If you are interested in the full results of the sales analysis for Wellard and Cockburn then feel free to contact Samantha Reece on 0452 067 117.

PropertyESP we make sense of property.