The Smartline Report – September Edition

The month in review: Perth

By Herron Todd White
September 2015

The Perth residential property market remains in a depressed state with supply outweighing demand which in turn places pressure on values. Recently released residential apartment projects struggle to achieve pre-sales as overall market confidence dwindles and the prospect of a diminution in value over the construction phase of a project weighs heavily on prospective buyers’ minds.

A further complicating factor for investors is that the rental market has softened considerably with rental listings increasing substantially and average weekly rental values falling.

Locations which are of the greatest concern are in areas where a small six to ten pack walk up multiple dwelling development is a new concept, where the locations are not well suited to this style of development due to limited infrastructure and amenity in the area. In the northern suburbs, these are locations such as Balga, Westminster and Nollamara with the most recent evidence showing multiple dwelling (end unit) values in these locations falling by circa 10% to 15% from 12 months ago.

Rivervale, Cloverdale and Belmont have also been saturated with small walk up type developments and local agents are reporting very low volumes of enquiry. The apparent oversupply has been exacerbated by the completion of numerous apartment towers in the Springs Precinct which appear to have absorbed most of the buyers in the local market. Substantial stock remains available for purchase (with this volume increasing) in a market with fewer buyers. These combined aspects will more than likely lead to price discounting.

Our involvement and discussions with agents for new residential development within the inner ring of Perth (three kilometres from the GPO comprising Perth, Northbridge, East Perth, Highgate, North Perth and Leederville) reveal pre-sale interest still exists, albeit at much lower levels relative to 2013 and 2014. Once again, there is a significant volume of approved stock and should all of this product be developed, an oversupply may well result. Noting the slowing presale market however, there is potential that many of these projects will not proceed in the current market due to an inability to meet pre-sale covenants, unless alternative funding sources are secured.

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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