He said Perth was experiencing a trend toward urban infill, helped along by the State Government’s Directions 2031 program, but over the past six months the number of first-home buyers had fallen away and investor interest was very weak as rents had softened.
‘As a result, this type of stock will soon be in over-supply,’ he said.
Several hundred units and apartments were being built across Perth to come on to the market in the next six to 12 months, much of it off-the-plan development initiated a year ago.
‘Developers have been responding to the call for more affordable housing with this product line, usually centred near shopping precincts and good transport nodes, especially along a train line,’ Mr Airey said.
In the city of Belmont the median house price dropped 1.8 per cent in the March quarter to $560,000. Units prices softened 2.2 per cent to $395,000.
‘Given that Perth overall fell 0.7 per cent the quarter, these shifts are fairly normal,’ he said.
‘There has been a lot of multi-residential development in Belmont over the past year with low-rise apartment blocks replacing old homes on large blocks.’
Mr Airey said buyers and developers should be aware that the multi-residential market in the Belmont area would soon soften due to oversupply. ‘Buyers will need to take a longer term view on capital growth and investors need to be conscious of the high vacancy rate in Perth and the fact that the median rent has dropped by about $30 a week since this time last year,’ he said.
‘In combination with slowing population growth and weaker first home buyer activity, the overall market in Perth will be well stocked with new apartments by Christmas and into the New Year.’
He said Belmont was no exception, with parts of Joondalup, Bassendean, Maylands, East Perth, Northbridge and the CBD also about to head into oversupply.