Perth

The Smartline Report – April Edition

The month in review: Perth

By Herron Todd White
April 2015

Land sale volumes have fallen considerably across all estates in the Perth metropolitan area. Sales agents have reported a significant fall in enquiries during December 2014 and January 2015 and a general increase in enquiries during February 2015.

Most estates have begun the process of addressing the softening in market enquiries with an increase in incentives, usually in the form of a cash rebate, voucher to a major white goods retailer or some other form of incentive usually associated with landscaping or fencing. This is usually seen as the precursor to the next step of reducing the actual asking price of the lot itself in order to stimulate demand.

As is typical with most Australian capital cities, the urban sprawl continues however the cost of producing a lot in Western Australia is significantly higher than in other states with infrastructure and labour costs playing a major factor. Hence, lot sizes have reduced to areas considered borderline unreasonable with some estates far from the Perth CBD (i.e. more than 35 minutes commute) less than 400 square metres, leaving the community with little effective infrastructure to off-set the reduced amount of outdoor space.

A specific example of lot activity is provided below relating to the area of Baldivis, an emerging residential south of Perth.

The most recent State Lot Activity Report issued by the Western Australian Planning Commission is dated September 2014 Quarter which indicates the following:

During the September quarter a total of 9,886 proposed lots were lodged for approval across the state, including 1,797 in the City of Rockingham. This adds to the 2,055 residential lots already under assessment within this local authority;

Within the September 2014 quarter, a total of 267 lots were conditionally approved within Baldivis ranking it number one in the state. Further, this adds to the 1,022 lots already conditionally approved in the preceding 12 month period.

Our investigations have revealed a number of large scale estates currently underway or in the process of gaining approval which are likely to provide future supply to an already over supplied market. Our discussions with selling agents and developers of these estates confirm that throughout the 2014 calendar year extremely strong demand prevailed however in the last two months of 2014 and leading into 2015, this demand softened considerably.

The graph below details Perth land sales and median price of the Perth metropolitan area between 2010 and December 2014. It is evident that there has been a steady decrease in the volume of sales from March 2014 to December 2014, with the December result being the lowest number of sales over the period by quite a considerable margin.

Not a lot can be read into the median price increase over the corresponding period (March 2014 to December 2014) especially in the context of the small number of sales which occurred in the December quarter.

Perth-April15

www.smartline.com.au

Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2015. Australian Credit Licence Number 385325

 

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