CoreLogic National housing Update October 2017
October Market Outlook
Offset or redraw? A look at the pros and cons
Capital city spring property update
5 smart ways to spring clean your finances
Adelaide October 2017
Brisbane October 2017
Cairns October 2017
Canberra October 2017
Darwin October 2017
Gold Coast October 2017
Melbourne October 2017
Newcastle October 2017
Perth October 2017
Regional NSW October 2017
Regional QLD October 2017
Regional SA October 2017
Regional VIC October 2017
South West WA October 2017
Sydney October 2017
Tasmania October 2017
Wollongong October 2017
CoreLogic NSW housing Update October 2017
CoreLogic QLD housing Update October 2017
CoreLogic SA housing Update October 2017
CoreLogic VIC housing Update October 2017
CoreLogic WA housing Update October 2017
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Perth October 2017
The month in review: Perth
By Herron Todd White
Like most markets throughout Australia, the Perth residential market has been through a period of changes, some of which have been led by market conditions, but others which have been led by innovation and maturity of the market place itself.
Inner and near city apartments are a classic example. Through 2008 to 2015, many of the products available were at the cheaper end of the scale, with investors and sometimes first home buyers the focus of developers, and as such, the products offered were often of a basic quality and design. The products offered were a large barrier to establishing a genuine, permanent inner city population, however that trend has slowly evolved. What many developers failed to realise was that there is a large, ageing population residing in near CBD locations such as Mount Lawley who are looking for opportunities to downsize without compromising on quality. Several new complexes have been left short of larger 3-bedroom 2-bathroom apartments, while suffering an oversupply of 1- and 2-bedroom designs. While these developments were actively targeting owneroccupiers, they appear to have misinterpreted the interest and price willingness of buyers looking for downsizing options.
The next metamorphic stage that has occurred within the Perth residential market is the uptake of granny flats and multi generational homes. A relaxing of the restrictions attached to the occupation of granny flats in recent years has seen a surge in demand. This was exacerbated when the Perth rental market was extremely tight, however demand remains strong as investors look to boost the return on their investment. Where once upon a time we would come across a granny flat every now and then, they are now quite common and feature two distinct types – freestanding, independent structures and those that are integrated into the main residence. Of the latter type, there are again variations – those that are made to be independently occupied with separate access and those that have the ability to operate as a single residence but with separate family spaces with two kitchens, separate and shared living spaces etc. These types of dwellings are becoming more common in sought after new estates, as parents and children combine their spending ability and plan for the years ahead. Whilst these are built to suit personal circumstances, consideration should be given to the additional cost of such an undertaking in comparison to market demand and value, with the potential of longer selling periods being required should circumstances change and the property be offered for sale.
One thing that hasn’t changed in recent times is the demand for traditional house and land, particularly in the first home buyer market. Shiny and new appears to capture a large proportion of first home buyers, even though the current market is offering entry into highly sought after locations for comparable prices. Buyers remain tempted by significant and ever increasing incentives to purchase land and build their first home – often over 30 kilometres from the CBD – even though recent evidence in many estates indicates values rapidly decline once the home is occupied.
Similarly, the market remains entrenched with the idea that quality means double brick construction, with anything less seen as inferior, within suburbia anyway.
Residents in Perth’s hill side suburbs commonly see through this and pay a premium for framed construction, but coastal plain suburbia is a hard judge of anything not double brick. Many builders have attempted to change this perception, via educating the market on the strength of framed construction, including the fact that the vast majority of dwellings in cyclone prone areas within Western Australia are almost all built with framed construction methodology, however the large challenge in the metropolitan area has been in setting a price differential without linking such to a reduction in the quality expectation. The lack of skilled trades for framed construction within the metro area also limits the cost effectiveness achieved in other capital cities, where anything but framed construction is considered unusual.
One of the largest benefits of framed construction however, comes from the relative ease of floor plan transformation in comparison to a double brick dwelling, which leads to a residence being more able to be adapted to suit changes in individual circumstances without having to pack, move and pay another round of stamp duty. Such consideration should be given by the market place, but isn’t at this stage.
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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.