Perth apartment market outlook strong for 2019

“Sales this quarter were boosted by the success of the Perth Hub project which saw the most successful launch quarter recorded in Essentials over the last three years,” said Mr David Cresp, Director at Urbis.

In addition to Perth Hub we saw two other projects launched in the quarter, adding 464 apartments to the existing supply.

Two-bedroom two-bathroom product retained its normal position of being the most sold product (43% of sales). However, this quarter one-bedroom apartments were only just behind and represented 39% of sales, this is well up from the proportion of sales for 2018 of 32% and 28% in 2017.

Owner occupiers have continued to drive the market and accounted for 53% of sales in Q4, however, this was lower than the overall level for 2018 of 62% of sales. The proportion of owner occupier was well up in 2018 from the 52% seen in 2016 and 2017.

As has been seen in other states, prior to the introduction of a foreign purchaser stamp duty surcharge (as at 1 January foreign buyers will pay an extra 7% stamp duty) there was an increase in activity for foreign buyers.

In the December quarter, 20% of sales were to foreign buyers which was only slightly up from quarter three which saw 19%. This was up significantly from the 13% of sales seen in 2017.

Mr Cresp said, “We are expecting low levels of foreign buyers in 2019. Perth has seen very little interest from the Chinese in buying apartments, and this has been the main source of foreign buyers on the east coast. We have continued to rely primarily on our traditional offshore markets of Singapore, Malaysia and Indonesia and these markets are quite price sensitive.”

“We are already hearing from developers, that the foreign buyers whom they were talking to last year, have lost all interest in Perth, if they had not purchased last year.

“Consequently, we are expecting that the proportion of foreign buyers in 2019 will be well below the 13% seen in 2017. As you would expect, this is a concern for developers as the foreign buyers are often the first buyers in a development, and greatly assist the developer getting to their pre-sales targets,” commented Mr Cresp.

“On a more positive note, we have seen a bit of a pick up of activity from east coast buyers, with 7% of buyers from the east coast in the second half of 2018.

“This was the highest level that we have seen in four years of surveying the Perth market. It highlights that as the east coast markets start to slow down investors are seeing opportunities in Perth with our market starting to recover,” stated Mr Cresp.

The recovery in the Perth market is highlighted by the latest figures from the ABS on established house in the residential property price index series. These showed that for Perth established house prices saw no change in prices between September 2018 and September 2017. This followed almost four years of negative results and compares to prices falling by 4.9 % in Sydney and 2.1% in Melbourne.

Mr Cresp said, “These figures clearly show that the Perth market residential market is starting to turn, and we expect 2019 to be an initial year of recovery and consolidation.

“Developers are clearly feeling more optimistic as we saw the highest level of apartment approvals seen since Q3 2016. In Q4 2018, 753 apartments approved for the quarter, bringing the total approved for 2018 to 2233.”

• 307 sales for the quarter and 1,229 sales for 2018. Up slightly on 1,229 sales in 2017.
• Weighted average sale price recorded: $602,524
• 3 project launches in the quarter: 464 new apartments
• 753 apartments approved in the quarter