REIWA President Hayden Groves believes Finbar’s recently announced 440-apartment development will be the last major residential project unveiled in the Canning Bridge Precinct for some time.
Three major developments are to deliver more than 900 new Applecross apartments, despite a dramatic slowdown in population growth and a stagnating real estate market.
Mr Groves said new developments were competing fiercely for a shrinking numbers of buyers.
“Population growth at 10 per cent of what is was four years ago, falling median apartment prices and more onerous lending criteria from the banks will curb developers’ enthusiasm for large-scale development until after the market turns,” he said.
Perth-wide, 3044 attached dwellings were listed for sale in the year to June 2016; a 21 per cent increase from two years ago.
Mr Groves said the already planned Canning Bridge Precinct developments might struggle to reach the pre-sale targets required to secure funding.
“In this current market it will be a challenge given competing developments in places like Perth city, South Perth, Swanbourne and North Fremantle,” he said.
“A premium location like Applecross should attract local downsizer buyers along with investors with an eye to living in a high-end luxury apartment down the track.
“Underlying demand should be there but only time will tell if that demand will be in sufficient numbers.”
Curtin University senior lecturer in Geography and Social Demography Amanda Davies conceded overseas and interstate migration had slowed but said Perth’s diversified population meant there was still significant demand for high-density housing.
“We noticed during the mining boom a shift in what people want, the model of the four bedroom, two bathroom house on the outskirts of the city is not as highly sought after,” Dr Davies said.
“The 30 and under market are looking for different types of lifestyles to what their parents had and we also have a considerable number of people entering retirement.
“If we put those things together it is very low risk to build high density housing that is high amenity in an area close to the CBD.
“I don’t think there is any chance whatsoever of problems with the sales of the Applecross apartments.”
Melville Mayor Russell Aubrey said the City had planned for up to 2400 new dwellings in the Canning Bridge Precinct by 2031 and remained confident in the development process.
“The City does not control the market, and it is not the role of local government to predict housing market supply and demand trend,” he said.
“The apartments currently approved or proposed are two or three stage developments which will allow for smaller levels of sales prior to initial construction.
“From the City’s point of view we are ahead of the game, in that we have planned ahead and have everything in place, so that when the market does improve, development will not be impeded waiting for legislation to be implemented, and our twenty year vision can be realised.
“Presales in Canning Bridge have so far been encouraging for developers despite the stagnant housing market, and we will hopefully be enjoying a different economic environment when these major developments are completed.”
Developer rubbishes ‘saturation’ suggestion
NORUP + Wilson director Dave Wilson rubbished suggestions the Canning Bridge Precinct’s apartment market was at saturation.
Mr Wilson said despite a slowdown, Western Australia was still experiencing positive population growth and that the State’s ratio of apartments to houses lagged well behind the rest of the country.
He also said it would take three to five years to deliver the new apartments, during which time more houses would be built further skewing that imbalance.
“The Canning Bridge area has been desperate for redevelopment, evident by the sales achieved to date within the projects that are being advertised,” he said.
“Our stage 1 development ‘The Precinct on Ogilvie’ achieved 60 per cent sales within three months of being launched and apartments were 100 per cent sold prior to completion.
“Our stage 2 development ‘The Precinct – Mount Pleasant’ comprises 199 apartments and 11 food and beverage tenancies.
“To date it has achieved our sales forecast targets and all the food and beverage tenancies have already been sold.
“With the sales secured to date we have already commenced piling works on the site.”
Mr Wilson said it was unusual for apartment developments to sell out at the rate the Perth market had become accustomed to during the mining boom.
“The challenge is to explain this fact to those who have accepted the past 10 years being the new normal, whereas it was clearly abnormal,” he said.
“Construction prices are coming down which helps developers provide a more affordable product.
“Developments are being better designed mainly due to the input of the local councils, development assessment panels and the Metropolitan Redevelopment Authority.
“So with a better product, lower cost, and low interest rates we see this as a good time to enter the property market.”
Stirling Captial senior development manager Jon Sparks said the 232-dwelling Cirque Apartments was on track to commence construction as planned in November 2016.
“With approximately 50 per cent of apartments now sold in stage 1, Cirque Apartments has attracted strong interest and we are close to achieving pre-sales targets,” he said.
“The Canning Bridge Precinct is undergoing significant growth and transformation, and buyer demand for the area remains strong.
“With excellent schools, great transport links, easy access to the City and Fremantle, good shopping and entertainment precincts, it’s easy to see why people want to live here.
“Further development will attract more residents and more options for entertainment and dining, adding to the vibrancy of the area.”