Tag: Perth property

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?

 

Would you invest $100 into WA’s future?

So at PropertyESP we are big fans of infrastructure and especially have been advocating that Metronet becomes a key priority with the newly elected Labor Government.

However contrary to our views, a number of developers have been reticent to endorse Metronet as they believe the development sector will be the ones forced to contribute with the value capture model.

Always focused on solutions, Samantha Reece Director of PropertyESP invited John Del Dosso from Colliers to present at the Property Council Residential Committee about other options that were also available to fast track Metronet.

John advised the Committee that if the Government was to charge a $100 levy/household per year they would raise $72 million.  If that same levy was placed on commercial businesses then this would add another $72 million per annum.  If you were to consider this as a perpetuating levy than in 5 years the Government would have raised over $600 million.

This is the exact model that Jeff Kennett applied in Victoria and as a result leap frogged that state into a growth phase (http://www.theage.com.au/victoria/regrets-only-a-few-20120928-26qme.html).

John went on further to recommend that a toll be placed on the Northern Freeway – which at the moment is one of the fastest growing corridors.  His reasoning was that the businesses travelling to work in this locale would be the ones paying the toll and residents – wishing to avoid this fee – would be more likely to catch the train (which would mean that this transport system may in fact become sustainable).

Samantha thought that this was a brilliant concept – despite being somewhat radical.

But when she raised it with other colleagues, their first reaction was to state that they didn’t think they should be forced to donate $100 so that Ellenbrook could get the train.

This led Samantha to think – just when would we as ratepayers, start to believe and hence invest in our own state?

This “What’s in it for me” mentality is in fact preventing us as a State to bloom – but at the end of the day $2/ week is very little to give up, in order to gain so much.

Perth is definitely in a precarious position – destined to grow with the most recent infrastructure which has been created – but also facing potential failure if our mindset is not right.

What do you think – would you invest $100 a year to help Perth’s transport network grow?

PS the good news is that Mark McGowan announced the Federal financing commitment for Metronet in today’s press (http://www.perthnow.com.au/news/western-australia/23-billion-jobs-boost-for-wa/news-story/b53b044c6aa3848a4c809169a1ea7645)

Coastal living the new black

Despite the resistance by coastal suburbs to welcome apartment living into their community – the research from the WA Apartment Advocacy has clearly shown that this status is going to have to change – and soon.

Of the 155 apartment owner occupiers surveyed, 15% had been living in a coastal location before then moving into their apartment (19% living on the coast).  However when asked where they would choose to live next time – 70% stated an apartment and 49% stated a coastal location.  44% also indicated they would choose riverside.  This was evenly dispersed across all age groups.

Of the 113 renters interviewed, 11% had been living on the coast and 14% moved into a coastal apartment.  But when asked where they would choose to live next 73% stated an apartment and 47% demonstrated a preference to coastal locations.

Of those living in the inner city – the owner occupiers showed a movement away from this address with a drop of 61% to 50% as this being their preferred location.

With Perth’s apartment market still very young, and limited supply in restricted locations, Perth apartment livers have chosen the best from what is on offer.

But ultimately what they want is access to the coast – which up until now has only been available to the privileged.

Councils that have therefore chosen to listen to the 5% of their population who reject apartment living have quite obviously chosen to ignore the majority who want this choice (and rightly so) for their home.

It is a message that Councils and Government will now need to start listening to.

At PropertyESP we are glad for this intelligence which raises the argument for permitting apartment living in key locations such as Trigg, Scarborough, Cottesloe and so forth.  Because without it – all we hear are the nay sayers.  But now there is a larger voice speaking up – and they are saying yay for choice!

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.

scarborough

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!

 

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:

10 March graph 1

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:

10 march graph 2

And this:

10 march graph 3

Or this:

10 March graph 4

Or even this:

10 march graph 5

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.

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.

 

Scarborough shows robust apartment results

Because PropertyESP was looking at Fremantle recently, we decided to cast our eyes north and look at the apartment sales for Scarborough for 2010-2016.

We looked specifically in the area nominated by the MRA for redevelopment, in which there were 211 sales of apartment houses.  While there was a peak in 2013/14, the Scarborough apartment market has been achieving about 30 sales per annum.

Interestingly when looking at the apartment amenities we found that 99% of the apartments sold had a pool and secure parking, with 50% of these sales also including a sauna and gym.

3 bed/2 bath apartments accounted for 114 sales (the bulk) while 2 bed apartments were the next most popular with 80 sales.

But what was interesting to note, is that the Scarborough apartment price has gradually grown since 2013 after reaching a peak of over $1.4 million in 2010.  The 2016 median price is now at $1.1 million.

And in the 2011-2015 period, the Scarborough apartment market has achieved capital growth of 15%.  However when you look at 3 bedroom 2 bathroom apartments alone, these have achieved 28% capital growth over the same period, which is evident in the below graph.

scarborough

Unlike other coastal locations, Scarborough property does not yet demonstrate a premium for ocean edge over ocean front properties.  PropertyESP is somewhat confident however that as developers grab those ocean edge blocks, this price variation will come to play and hence anyone buying into the market place would be hoping for that uplift (which in Fremantle is 13% premium difference).

Once again the apartment market in this location is showing that since 2011 it has been in a steady pattern and in fact for the 3 bedroom 2 bathroom apartments, is recovering very nicely.

If you would like to see the full results for Scarborough then contact PropertyESP on 0452 067 117 and organise a presentation – because you won’t see this data anywhere else.

We are known, after all, for making sense of property!