Correction cools pace in Perth market

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We are seeing the market correct itself, as it should. Many of the projects we have been monitoring have moved into the construction phase, which is when sales and marketing tends to wind down.

Urbis Director of Property Economics and Research David Cresp said the market had undergone a correction, with the launch of fewer new projects, which had in turn reduced the number of sales.

“We are seeing the market correct itself, as it should,” Mr Cresp said. “Many of the projects we have been monitoring have moved into the construction phase, which is when sales and marketing tends to wind down.

“Fewer sales mean developers have also hit the pause button on some projects, and that will give the market time to absorb the stock now available.”

Mr Cresp said more speculative developments were rarely going ahead, and the market was returning to a sensible level of activity.

“Some of the projects that were proposed will not now proceed, including around 1,000 apartments that had been earmarked for the Megamart Site on Beaufort and Stirling Street and 560 apartments for King Square which is currently on hold,” he said.

“These are the headline developments, but most of those that will not go ahead are proposed by smaller and mid-­tier developers.

“The major developers are generally getting sales and their projects are still proceeding.”

Mr Cresp said the configuration of apartments sought by buyers was changing as the market matured, with increased interest in both smaller and larger apartment sizes.

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It means a successful apartment development in Perth really has to capture the interest and aspirations of the local owner-­occupier market – if it is not somewhere they would want to live, it just won’t sell.

Three-­bedroom apartments represented 10 per cent of sales in the June 2016 quarter, a rise on the sales seen in the previous two quarters. 

One-­bedroom, one-­bathroom apartments comprised 33 per cent of sales, an increase of 3.3 per cent over the previous quarter.

The staple configuration remains the two-­bedroom, two-­bathroom apartment, which represents 43 per cent of sales, while a small number of apartments were sold with different configurations.

The average size of a one-­bedroom apartment was now 52sq m, while a two-­bedroom, two-­bathroom apartment averaged 82sq m.

The biggest apartments were in the Western Suburbs, with an average internal size of 86sq m — well above the weighted average size for Metropolitan Perth of 73sq m.

Mr Cresp said that on paper, almost 17,000 apartments were on the cards for Perth, but this figure included developments that had not yet secured development approval (7000) and many that had not applied for planning permission (2000).

About 5,600 apartments were in projects now selling off the plan. Another 3,672 apartments were currently under construction, and 64 per cent of these have been sold off the plan.