Apartment research shows interesting trends

 

National online real estate company REA just recently released some results based on research that they conducted on a national level with 12,618 apartment buyers (of which there were 415 respondents – on par with a poll).

PropertyESP has reviewed this information, from a marketing perspective, which is one of our key areas of strength.

Firstly, what was very interesting to note, was the increase in WA owner occupier buyers in the apartment market since 2015, which grew from 41% to 60% in 2017.

When considering the mix of apartments in any development, it is imperative to consider your local demographic profile and even undertake research in the marketplace to understand what this market is seeking.  We have known many developers to be stuck with one bedroom apartments, while the three bedrooms sold first.  While one bedrooms may give a higher yield – this is only the case, if they in fact sell!

30% of these buyers were also considering townhouses in conjunction with apartments with the intent of reducing the amount of maintenance time, as would be expected, from a traditional home.  As such apartment developers don’t just face competition from other apartment developments – but other small housing options as well, such as townhouses.

The research indicated that the time of conversion to sale was approximately 4.5 months.  43% of the buyers were also reading something related to property on a daily basis and hence this tends to demonstrate that regular social media posts/e-news are able to assist with promoting your project in this realm.  This is especially so if you need to nurture buyers over a 4.5 month period.

Buyers were interested in market insights, advice about buying off the plan and apartment designs and amenities in the property related literature.

When asked what were the benefits of buying off the plan, respondents indicated:

  • Locking in current market price (49%)
  • Modern features (47%)
  • Brand new – no one has lived there (45%)
  • Cost savings (45%)
  • Customised finishes (45%)
  • Flexibility to choose floor plan (40%)

However what restricted their decision to buy off the plan included:

  • Unexpected costs/going over budget
  • Funding the purchase
  • The stress of construction
  • Not knowing what to expect

When asked what influenced the purchase of their apartment, respondents indicated:

  • Price (62%)
  • Location (49%)
  • Developer’s reputation (48%)
  • Access to public transport (46%)

When asked what amenities buyers were looking for, respondents indicated:

  • Storage in the car park (64%)
  • Fully equipped gym (42%)
  • Outdoor entertaining spaces (42%)

74% indicated that some kind of incentive influenced their purchasing decision, with 62% indicating a preference for the developer to pay stamp duty, 58% stating free upgrades and 45% a rental guarantee period.  However this is not always the case and we have witnessed projects in Perth, which have in fact put up their prices in the last six months.  In contrast some areas are oversupplied and hence incentives are a sales tool to generate traction with some buyers.  Again it is on a suburb by suburb analysis.

What was also interesting to note was how buyers evaluate a developer’s reputation.  54% quoted the developers track record with previous projects, 40% indicated a long history in the market and 30% positive word of mouth.  On that basis companies need to be mindful of not just marketing their projects but also their company brand.  It all ties in together.

If you are, like us, excited about the future of the Perth apartment market and you are keen to gain a competitive advantage, please contact Sam to discuss further at info@propertyesp.com.au.

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How a few streets can make a big difference to property values

As always, keen to see what is happening in the Perth apartment market, PropertyESP recently took a look at settled sales for the East Perth area from 2015-2018.

Looking just at apartment houses, apartment units and penthouses we found that the East Perth market was showing signs of price recovery across the board.

east perth graph 1 2018

But when we broke East Perth into precincts we found that Wellington Square compared to Claisebrook and the remainder of East Perth, definitely demonstrated a price difference.

east perth graph 2 2018

And this was evident whether talking about apartment houses, units or penthouses or even 1, 2 or 3 bedrooms.

east perth graph 3 2018

east perth graph 4 2018

Who would have known?

It is quite evident that while sales vary across suburbs they can also do so within suburbs and hence before you purchase land for development it really is best to check your facts.  At the end of the day it can play a major factor in your pricing and profit and hence it is essential to know how the sums add up!

If you are seeking that level of detail then contact Sam at PropertyESP because we are all about drilling down into the nitty gritty! And we are the only company in Australia that provides this kind of insight!

Appetite for additional car bays prevalent

Recent research conducted by WA Apartment Advocacy has shown that while 70% of the 174 respondents were happy with their allocated parking bays in their apartment development, an astonishing 50% would be prepared pay an additional $25,000 for another car space.

Of the 30% who were not happy with the number of allocated parking bays, the majority of these were residents with just one car bay.

We have often heard the mantra from developers that they would be happy to provide additional bays if buyers were prepared to pay for it and this data now suggests that the appetite for extra parking is in fact prevalent.

This largely stems from the fact that 50% of the respondents were still reliant on their vehicles for work, shopping and leisure and while the Metronet will alleviate this situation, it is still somewhat in the distant future.

Interestingly 15% of respondents who did live close to public transport were prepared to forfeit their car bay and save the $25,000 on their apartment price.

The data also showed that 30% of the respondents were unhappy with the allocation of visitor parking in their development, with many citing that residents were using these bays as an overflow measure.

For some time now Local and State Governments have been seeking to lower the ratio of car bays to apartments and yet the research does demonstrate that this planning move is somewhat premature.

The research also begs the question as to why developers are not seeking to sell car bays as an ancillary aspect to the apartment itself.

Further improvements that residents were seeking to their parking woes included electric car charging points, dedicated car washing/cleaning bays, larger parking spots and greater security.

This research – if nothing else – clearly shows that developers need to be researching their buyer’s needs before making any assumptions.  This will undeniably assist with their own design process as well as overcoming imposts by planning regulators.

If you are interested in hearing more about WA Apartment Advocacy and its research results register at www.waaa.net.au.

 

Perth does offer apartment choice

PropertyESP just completed some research on behalf of the Property Council examining the number of 3+ bedroom apartments located in the Perth LGA.

Contrary to popular belief, PropertyESP actually identified 1135 sales of 3+ bedroom apartments from 2012-2017, with the bulk of these in East Perth (697).

But other locations including Crawley (134), Perth CBD (127) and West Perth (134) also reflected these larger apartments.

But what we also witnessed was the decline in sales for these larger apartments with 279 sales recorded in 2012 and just 95 in 2017.

It makes us wonder if this decline is due to these apartments being tightly held onto or alternatively a lack of supply?

Over 900 of these sales were also apartment houses in contrast to penthouses or home units and interestingly it was these apartments that reflected an increase in median price from $690,000 in 2012 to $860,000 in 2017.

On the other hand penthouses which were selling at a median price point of $1.7 million in 2012 are now selling at $1.5 million and home units (smaller complexes without lifts) which had started at a median price point of $534,000 in 2012 were priced at just $477,500 in 2017.

12 Jan blog

However, considering trends with baby boomers and the family sector, apartment developers will have to consider increasing the ratio of three bedrooms within the City, beyond a token gesture.

Data has shown that Perth is second to Sydney across the nation for the number of families residing in apartments.

Plus nationally only 5% of our seniors in fact choose a retirement village when looking to relocate out of their traditional family home.

Perth is evolving and people are choosing to reside in the City because of its strong employment base and vitality (as a result of improved infrastructure) and on that basis we need to reflect this in our ongoing housing options.

If you are seeking this kind of intelligence (and who wouldn’t?) then contact the team at PropertyESP.  We make sense of property.