The month in review: Perth
By Herron Todd White
June 2010
The past 12 months have seen a significant change in buyer profiles throughout the Perth metropolitan area,
and a mixed bag of activity through each sector. Let’s
follow the theme from 12 months ago and work from the
CBD outwards and see what changes have occurred.
The CBD apartment market remains static. Considerable
supply is available with more under construction. Whilst
there was some speculator interest 12 months ago, this
interest has waned and will more than likely continue to
do so as interest rates rise.
The inner belt of suburbia was one of the first markets
to recover after the lull of 2008/2009. Young professionals
flocked to trendy suburbs such as Leederville and Mount
Hawthorn, while Mums and Dads took the opportunity
to downsize into premium locations such as South Perth,
Victoria Park and Como. The initial demand created a
shortage of properties, with multiple competing offers
driving values up.
Turnover of properties within prestige locations such as
Applecross, the western suburbs and the coastal strip
remains low, although there has been some price growth
due to a lack of supply. It is yet to be seen whether the
increase in activity in other sectors will have a ripple effect
and kick start the prestige market. There are certainly
many areas where values remain below the peak of 2006-
2007.
With the first home owners grant in full swing 12 months
ago, there was a perfect opportunity for buyers to trade
up into more desired suburbs. This has stripped supply
from the market and led to positive growth in many
sought after areas. These markets quickly returned to
almost overheated conditions, and created a flow on
effect to the neighbouring suburbs. In some cases, the
price paid for properties was hard to justify with sales
from the previous quarter – as they were now out of
touch with the market.
Once the First Home Owners Boost disappeared, the focus
for this sector returned to location, rather than the dream
of a large, new house. Previously undesired suburbs such
as Coolbellup benefit from a good location, larger style
lots and dated small dwellings ripe for renovation or
redevelopment.
Newly developing suburbs are witnessing a variety of
results. Well-presented developments with good-sized
lots are commanding a solid premium, whilst inferior
estates are struggling to a certain extent. The buyer
profile mainly comprises of people who are returning to
‘new home’ living now that their existing dwelling has
dated, with many relocating to adjacent suburbs.
Further out in the urban fringe, first home-buyer activity
has retracted considerably and growth is currently static.
There are serious supply issues in some areas and limited
growth prospects in the short term.
Generally, properties that are reasonably located and well
presented are commanding and achieving premium sale prices. Some areas have overheated as high confidence
buyers return to the market and stock levels have returned
to more normal levels, although we note that according
to REIWA, listings jumped by 20% in the first quarter.
Its worth noting that recent interest rate rises combined
with the Federal Governments proposed super tax on
resource companies has had a profound effect on investor
confidence in WA. Recent discussions with real estate
agents reveal that home open attendance numbers have
noticeably eased in recent weeks which may signify a
softening of activity/values in the short to medium term.
Numerous multi- billion-dollar projects have reportedly
been shelved for the time being and we nervously wait to
see how the proposed tax will play out.
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