Perth apartment market looks positive in medium term
Samantha Reece attended the Property Council’s multi-unit development conference yesterday and came away with some great learnings that we will blog about over the forthcoming weeks.
But of the highest level of interest was the presentation from David Cresp of Urbis who spoke about Perth’s apartment market.
We are certainly hearing from clients that they are having to work harder to secure sales and the data outlined in the presentation indicated factors that were contributing to this current state.
Firstly David outlined the fact that Perth has the lowest proportion of apartments nationally at 9% of the housing stock, whereas Melbourne has 15% and Sydney 26%. While this is a trend that will alter over time, Perth is certainly behind the other national cities when considering density.
And this is even more evident, with Perth’s apartment approvals in 2015 at the same level as it was back in 2008. And while there are 44,000 apartments in total in Perth, 25,000 of these were constructed before 2000 and hence represent older stock.
There is no denying that WA needs 50,000 more dwellings to match underlying demand and this indicates that there is no oversupply of housing stock, especially as there were only 23,000 dwellings undergoing construction in 2015/16.
And while there is an expected delivery of 4000 apartments in Perth in 2017, if demand increases from the current 20% to 30% then there will be a need for 5500 apartments. Once again this is an indication that there is not an oversupply in this specific market either.
The presentation also outlined that in 2012/13 Perth experienced an undersupply in apartments and that is why the market appeared to be moving faster, than current times.
And while there were 13 projects and 1300 apartments launched in the last quarter, not all will proceed.
As was stated, demand is continuing but Perth is now witnessing a condition where supply is currently exceeding demand – but this is just a short term situation considering the ongoing demand for housing stock.
The data also demonstrated that in 2015 there was $1.5 billion in apartment sales. Of this 86% of the completed projects are sold, 65% under construction are sold and 31% in presales are sold.
In addition 50% of buyers are owner occupiers, 20% investors and 23% FIRB.
As such the current situation, where supply does exceed demand, is just temporary and there is no denying that CBD located properties are achieving better sales than outer suburbs. On that basis it is more important than ever that your sales team are clear about your project’s unique selling proposition and ultimately are proactive in closing the sale!
If you would like to brush up on your sales team’s selling skills then contact Samantha Reece on 0452 067 117 – we can guarantee to give your project that elusive competitive edge.