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!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government benchmark creates discussion

Samantha Reece of PropertyESP attended the recent Property Council breakfast which launched the Greater Perth Councils benchmark report on Statutory Planning Performance.

This review covered 29 Councils in the Perth metropolitan area and rated them on:

  • The age of the Council’s Local Planning Strategy (LPS),
  • Number of amendments to the Local Planning schemes,
  • Delegation of planning approvals, and
  • Timeliness of processing planning applications.

There were certainly some very telling results.

For example, the City of Nedlands had not reviewed their local planning scheme in 31 years and had made 201 amendments in that time.

Peppermint Grove had also not reviewed their scheme in 20 years – but unlike other Councils they had made no amendments to their plan.  It was also the only Council out of the 29 Councils that failed to delegate planning decisions to their staff.

Looking at an overall score, Melville achieved the highest rating (21.7/23), followed by Belmont (20.1).

However what the score card failed to consider was the level of action taken by a Council.

So City of Fremantle, which has recently approved a swathe of apartments for its CBD, scored just two points higher than Peppermint Grove because it did not have a current LPS.

There is no doubt that this report could certainly have taken into account a few more elements to measure real performance, but overall it was a good starting point and with the Property Council advising they will be conducting this review annually, I am sure that we may see a level of frenzied activity from some Councils over the forthcoming 12 months.

This report was intended to highlight where there are deficiencies in the planning system. As a result the Department of Planning did not come off lightly either, acknowledging that they had 18 LPS awaiting review by their own staff.

Overall there is room for improvement and that is the real focus of the Property Council’s report.

Let’s hope that in 12 months’ time we are not looking at the same results – but rather a series of Councils who are now focused on providing an LPS that suits the needs of their current community (and not that of their community circa 1980’s).

A full copy of the report can be viewed at http://www.propertycouncil.com.au/Web/News/Articles/News_listing/Web/Content/News/WA/2016/Majority_of_Local_Governments_Miss_the_Mark_in_Planning_Performance_.aspx

The higher they climb, the more likely they will fall

In our last post, we took a closer look at resales in the Western Suburbs.  Unchanged, we were seeing growth rates of 7% per annum.  Renovated and extended, growth rates were higher – 21% per annum.

But not all properties change hands at a profit.  Some make a loss.  What sparked our interest in Cottesloe, Dalkeith and Nedlands in the first place was a recent article showing differences between the suburbs in profits and losses.

We’ve long had an interest in resales, finding them the best indicator of the underlying growth of a suburb.  And as we saw in last week’s post, even properties resold in the price stable years had grown in value.

To get a good handle on resales, we have focused our analysis on those properties that were largely unchanged between sales, to more accurately reflect underlying market trends.  We have also removed from the data any transactions that could affect the credibility of the data e.g. divorces etc.

Over the longer term, as expected, after being held for 5.7 years on average, 91% of properties were resold at a higher price than they were bought for.

9 May blog 11c

However, since 2011, each suburb has seen an increase in the proportion of properties sold at a loss, reflecting the larger impact of properties bought during the peak and resold after the market had come down from that peak.

9 May blog 11c 1

In examining the data, we realised that something else was at play.  Examining resales, it is clear that the houses that were bought for under $1m still tended to gain in value, but that losses were sustained in houses originally bought for $2m plus.

9 May blog 11x 2

In recent years, when house prices have come off the boil, losses were more likely to be sustained for premium properties than for those that were more moderately priced.

There’s still money to be made in Perth’s premium suburbs.  But like anything, your profit depends in part on your original investment.  And as this data surely shows it is wise to do your homework before purchasing a premium home in a premium suburb!

This is what PropertyESP does best – we get into the nitty gritty like no other agency in WA.  Next time you are thinking about your price point for a project contact PropertyESP – we will help maximise your sales – guaranteed!

 

 

 

 

The changing face of suburbs and the impact on sale prices

The majority of properties change hands with minimal upgrades in between sales.  Maybe a new coat of paint, maybe new curtains, some new plants in the garden.  But otherwise, they’re pretty much the same as the day they were bought … just a little older.

In mature suburbs, however, we’ve long known that properties are often renovated and extended, and this has an impact on the sales prices being achieved as larger properties generally attract higher prices.

Our recent analysis of residential sales in Cottesloe, Dalkeith and Nedlands over a period of around 20 years has given us a good insight into the changing face of these suburbs and its impact on property prices.

Firstly, some context….

Looking solely at houses, the chart shows the strong growth in median house prices over the longer term in Cottesloe, Dalkeith and Nedlands.  And they grew more strongly than greater Perth.

blog 11b 1

Focusing on the more recent sales, when prices were relatively stable, the following chart shows a distinct preference in our three suburbs for more recently constructed houses.  This tends to beg the question – is the market’s love affair with older properties waning?

blog 11b 2

Taking a closer look at property size by build year, from the following chart we can see that the house sizes have changed over time.  2 bed and 3 bed houses were the most popular house sizes during the 1900-1949 period.  However, by the 1980-2015 period, 4 bed houses were the most popular.  And any 3 bed houses built during those years came with 2 bathrooms.  Knowing that house prices are affected by property size, we can see how the higher prices being achieved by the more recently built houses are also driven by the newer houses being larger in size.

blog 11b 3

In reality, there were few houses built early last century with 4 and 5 bedrooms.  Many of those we see in the previous chart were smaller houses extended to meet the needs and expectations of modern families.  This, too, has an impact on median sale prices.  Generally we only see the price of the house sold.  We don’t realise that the previous time it was sold, it was a much smaller property.

The best way to examine the impact of this is to look at resales, when a property is sold once, then sold again.

From 1990-2015, 78% of the sales in Cottesloe, Dalkeith and Nedlands were of properties that were sold more than once during the period.  55% of resales were sold twice during that period.  1 property changed hands 9 times.

86% of those properties were sold “largely unchanged”.  9% of properties were expanded (increase in number bedrooms and/or bathrooms) between sales.  Demolitions and developments of vacant lots (newly developed or demolished) accounted for the rest.

Focusing on 2011-2015 sales, those properties that were resold largely unchanged had made gains (since their previous sale … which could have been as far back as 1990) of 7% per annum.

In contrast, those that had been renovated and extended made gains of 21% per annum on average.

blog 11b 4

Renovations and extensions, property styles and trends are just some of the things that impact on median sale prices.  That is why it is important to look behind the broad trend to examine what is influencing prices, aside from a general increase in the value of land.

It is this extra detail that PropertyESP is known for and which can benefit your next project.  For more details contact Samantha Reece on 0452 067 117.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

When to be cautious of mean and median

After much speculation that the Western Suburbs prices are on a downward trend, property consultancy firm PropertyESP has undertaken a detailed analysis of Mosman Park, Cottesloe, Applecross, Peppermint Grove and Dalkeith to see the true story behind the sales.

The company has found that over a two year period (January 2012 to September 2014), the suburb of Mosman Park had several peaks and troughs, including a price spike in September 2013 quarter of 27% and another in January – June 2014 of 32% (14% + 18% respectively). In contrast the area experienced a median price decline in the December 2013 quarter of 32%.

Median house prices Mosman Park January 2012 - September 2014
Median house prices Mosman Park January 2012 – September 2014

But as Samantha Reece, Director of PropertyESP states, this was because of the types of houses that were available for sale and not the ongoing trend.

“The median price in June 2013 was $1.4 million and this increased to $1.7 million in September because there were more four bedroom houses (65%) sold in this latter quarter and the average block size also increased from 595sqm to 746sqm,” Ms Reece said.

june quarter

“In contrast the 32% decrease we saw in the December 2013 quarter was due to the average block size sold decreasing from 746sqm to 527sqm and 55% of the houses sold were 1-3 bedrooms.

“This is why it is essential that property buyers don’t just look at median and mean as an indicator of a suburb, but rather the data behind the numbers.

“Furthermore, when you don’t have a high volume of sales, and in Mosman Park’s case, an average of 34 sales per quarter, then median house prices can fluctuate widely from one quarter to the next.”

PropertyESP is a newly formed company that seeks to drill down into the figures and provide the why for property movements.

“From the recent news, buyers would assume that the Western Suburbs is in fact depreciating in value but when you have such a wide variation of property types and a small number of sales, you really need to look at the individual sales, the quality of the homes and even the views to work out what is truly happening,” Ms Reece said.

“We have formed PropertyESP because we want to provide the full picture and give buyers accurate data and so that their decisions are more thought through.”

The company will be providing free regular blog posts about these kinds of insights and property buyers can register at www.propertyesp.com.au.

“At the end of the day there is so much information about property and we just want to provide the data, that helps make sense of it all,” Ms Reece said.