realestate.com – PropertyESP

Apartment supply update

Samantha Reece of PropertyESP recently attended and participated in the Property Council Apartment conference where Urbis revealed their First Quarter 2017 results.

At present 20% of Perth’s building approvals are for apartments compared to 60% in Sydney and 46% in Melbourne. This equates to 3797 apartments currently under construction.

There are at present 134 active apartment developments in WA and 11,194 apartments, which only represents about 10% of the apartments nationally, which tends to put WA’s supply somewhat into perspective.

There were 258 sales in the first Quarter 2017 with an average price of $650,000. These sales were primarily in the CBD and Western Suburbs. 25 of these sales were attributed to Essence apartments alone, located in Claremont.

58% of the buyers were owner occupiers while 25% were identified as investors.

2017 will be a peak year of construction with an anticipated 3200 apartments delivered. While the number of sales matched the apartments launched in Q1 2017, there will be another 800 apartments delivered in Q2 and 1200 in Q4.

Certainly the data still upheld Urbis’ prediction that there will be a shortfall of apartments by 2020. This is primarily because not all projects will proceed to construction phase.

This data also aligned with REA’s research which showed that the top suburbs searched for apartments were as follows:

East Perth
Perth
Rivervale (The Springs)
South Perth
Scarborough
Fremantle
North Perth
Burswood

There is no doubt that Perth is still far behind the other states in terms of apartment supply – but it also shows that demand is relatively strong and more so now from the owner/occupier market than ever before.

Certainly the next 12 months and commencement (or non) of a number of projects will impact on these forecasts and hence it will be an interesting market to observe.

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.

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

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).

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

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!

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:

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:

And this:

Or this:

Or even this:

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.

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.