[+] Lure of the West: Perth’s Opportunities Command Attention

When Nikki de Rijcke gained her sales agent’s licence in Perth five years ago, the first thing she did was join the Real Estate Institute of Western Australia, the state’s peak industry body. It was April of 2019, she recalls, and REIWA’s weekly market snapshot told her there were about 17,000 properties for sale in Perth and surrounds. Eighteen months later—in the week ending October 11, 2020—the number of properties available in the WA capital had fallen to 10,422. That number has been falling ever since. “If you look at the real estate market back then versus what it is now, those numbers have declined every single week,” says de Rijcke, who these days runs her own shop, JW Residential. As of May 19, REIWA said there were 3511 properties listed for sale. Just 2012 are houses, and about 1000 are apartments. On average, De Rijcke says, it is taking her between just 3 and 14 days to sell a house. And that’s the Perth property market in a nutshell—a serious lack of supply in a market hyped with demand. ▲ Based on current quarterly figures, Perth housing prices as a whole are expected to rise by around 24 per cent this year. Statistics by CoreLogic, the property data, information, analytics and services provider, show that Greater Perth housing prices grew by 21.1 per cent in the past 12 months—seriously out-performing all other Australian capital cities . “In many respects Perth is running its own race at the moment,” CoreLogic head of research for Asia-Pacific Tim Lawless says. Like de Rijcke, he sees listing volumes across Perth—the number of homes being advertised for sale—tracking about 44 per cent below the previous five-year average. “If you look at the same numbers, but from a demand-side perspective, we’re seeing demonstrated home sales tracking about 34 per cent above the five-year average,” Lawless told The Urban Developer . “This is where the disconnect comes from. “So clearly, it’s very much a seller’s market … there’s not a great deal of opportunity to negotiate or deliberate on a purchasing decision.” Population growth is driving demand right across the country, but again, Perth is out-stripping other cities. The Australian Bureau of Statistics says while Melbourne had the biggest increase in 2023 (167,500 people), at 3.6 per cent Perth had the highest growth rate. But it’s where that migration is coming from that is key. ▲ CoreLogic’s Lawless, JW Residential’s de Rijcke and the Housing Industry Association’s Vaughan. “Perth is a little bit different in the sense that it has very high rates of net overseas migration,” Lawless says, “but arguably more importantly, it has a very high rate of intra-state migration,as well.” The only other state to boast that is Queensland. Why intra-state migration? Well, it’s the economy stupid. In delivering the West Australian government’s budget earlier this month, treasurer Rita Saffioti described the WA economy as “the envy of the rest of Australia”. She may be right. According to a report released in March by the conservative-leaning Institute of Public Affairs, WA leads other states on the key measures of low taxes, energy prices and high wages growth. It ranks second for jobs growth and business investment. Daniel Rainone is senior development manager with WA-based Bluerock Projects. “There’s a great job market over here, and the economy’s good,” he says. “We’ve got big budget surpluses and a government that seems to be investing in local infrastructure, public transport, and in major works to extend this state’s prospects and the interest from out-of-state and overseas.” Median house price percentage increases by suburb ▲ Source: CoreLogic Perhaps most telling, by comparison Perth’s housing is affordable. According to CoreLogic, just three Greater Perth SA3s (Statistical Area Levels, or suburban areas with a population of more than 20,000) have median house prices of more than a million dollars—Cottesloe-Claremont, Melville and Fremantle. Even Perth City has a current median value of just under $697,000. Little wonder Sydneyites and Melburnians are heading to Perth. Take Armadale, for example, a suburb about 28km south-east of Perth on the major junction of the South Western and Albany highways. It is often regarded as dangerous and unsafe with the news website Perth Now in 2017 branding it “Perth’s most violent suburb.” CoreLogic data shows Armadale median house prices rose 31.6 per cent in the past 12 months to $650,500. “I mean, that’s astounding,” says Lawless. ▲ Cottesloe Beach: The Cottesloe-Claremont market is among Perth’s most expensive, but has softened. “We can definitely see in our data it is the more affordable areas that are leading the price gains.” Even the softest markets—generally the established and more expensive areas—are experiencing growth, although it has slowed. Cottesloe-Claremont prices increased nearly $155,000 last year, but with a median house price of $2.15 million, that represented just a 7.8 per cent increase. Down at the coalface, real estate agent de Rijcke is seeing a similar pattern. “I have also seen at the lower end of the market that were once considered to be undesirable areas, have now grown the most,” she says. “Look at suburbs like Cooloongup or Hillman (both within the coastal city of Rockingham about 45km south of Perth), where before 2019 you could pick up houses on good-sized land for about $220,000 to $270,000. “Now they’ll go for over $600,000.” She points to investors from the eastern states increased activity in the west during the past 18 months. “I’ve found the locals often don’t consider these to be desirable areas,” de Rijcke says. ▲ Bluerock’s Daniel Rainone and the developer’s 51-apartment build-to-rent project in Midland. “Then east coast investors look at it .. just 40 minutes from the city and five minutes from the beach. They can’t believe it is so cheap.” Perth’s metropolitan area—for years hemmed in between the Indian Ocean to the west and the hills of the Darling Scarp to the east—expanded first north, and then south. Today, and depending to whom you listen, the metropolitan area is about 125km long, extending from Two Rocks in the north to Singleton in south. The infrastructure issues that come with a distance like that were exacerbated by planning blunders in the 1970s when various government reports recommended the Perth-to-Fremantle rail line be closed and replaced with buses. It culminated with the Liberal government of Sir Charles Court controversially doing exactly that in September, 1979. The Liberal party was defeated in the 1983 election and the Fremantle line reopened several months later. “I think there’s a lot to be said about the mistakes and the things that were done wrongly in the past,” Bluerock’s Rainone says. “But what we’re seeing, certainly from the current government or government departments, is that there is a real desire to change this and do some really good work.” ▲ The West Australian-made C-series trains rolled out in April as part of the multibillion-dollar Metronet rail project. He cites Metronet—at $11 billion-plus, the single biggest investment in public transport the city has had, with 72km of new passenger rail and 23 new stations. Beyond the political speak around the decades-long plan, the government understands it’s going to have to work more closely with the private sector and the industry to turn the roughly 8000ha of land around the new stations into places in which to live and work. And invest. For example, Bluerock Projects has begun building its timber-framed Tuohy Garden Apartments—51 affordable build-to-rent units—in Midland, 16km east of the capital, on land it acquired from the State Government’s Development WA. Midland has been earmarked for redevelopment as one of the “growing local vibrant precincts,” according to housing and lands minister John Carey. While Bluerock’s development is small by eastern seaboard standards, the government has tipped the project as the next step in the scaling up of build-to-rent delivery across the state, with a host of affordable projects in the works . Regardless, Perth’s critically low housing supply is unlikely to be solved any time soon. The Housing Industry Association’s Perth-based deputy executive director Phil Vaughan says the WA capital has capacity to build 15,000 homes a year, which is about 10,000 short of the government’s housing targets. ▲ Edith Cowan University’s new city campus. Jointly funded by the Australian and WA governments as well as the uni, it will be the first university in the city. “So our workforce is a major constraint,” he says. “We expect to grow that forecast over the next few years to 16,000 or 17,000 homes, but we’re still really falling short of the government targets.” And that means Perth’s housing prices are likely to stay elevated, according to Lawless. “It looks to me like we’re not going to be seeing any slowdown in this marketplace, at least in the immediate future,” he says. “But ultimately, if we see housing prices continue to rise at this pace then one of the competitive advantages that Perth has, which is its sheer affordability, just gets completely eroded. “So you wouldn’t describe this current rate of growth as sustainable by any means.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Lure of the West: Perth’s Opportunities Command Attention

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[+] Lure of the West: Perth’s Opportunities Command Attention

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