THE western suburbs and investors seeking development opportunities are leading Perth’s property market recovery, with the new land market yet to follow, according to the Urban Development Institute (UDIA WA).
Chief executive Allison Hailes said while the new land market remained sluggish, positive activity in the top and middle established sectors provided a good indication that it would soon follow a positive trajectory.
“Traditionally, given the cyclical nature of the Perth property market, the established housing market is a good forward indicator of what to expect 12 to 18 months later in the new land market,” she said.
Within Perth’s premium housing market, UDIA WA’s analysis of Landgate settlement data showed areas such as Mosman Park and Cottesloe had started to perform well with strong housing demand and limited supply driving price increases.
“Property settlements priced $1 million and over for the Central Perth Metropolitan Region have recorded positive annual growth for both the March and June 2018 quarters,” Ms Hailes said.
“Across the central region there was 4.7 per cent annual growth in the number of sales above $1 million during both quarters.
“In particular, Mosman Park and Cottesloe recorded steady levels of property settlements priced $1 million and above in recent months.”
Mosman Park recorded an 8.7 per cent quarterly increase in the June quarter and Cottesloe recorded a 17.9 per cent annual growth rate for settlements over $1 million in the first two quarters of 2018.
Cottesloe also recorded a 2.1 per cent quarterly increase in its median settlement price to sit at $1.48 million.
Mosman Park’s median property settlement price lifted 13.2 per cent over the quarter to $1.245 million, the highest median price since the March quarter 2016 and 9.9 per cent higher than the same time last year.
Property investors were returning to the market, particularly within middle-ring areas.
Ms Hailes said savvy investors were snapping up small-scale development opportunities with a view to potentially making a profit as the market lifted.
“Central metropolitan property settlements with land areas between 750 – 2000 sq m exhibited the first signs of annual growth in the June quarter 2018, lifting 5.2 per cent to sit at 545 for the quarter,” she said.
“The median price for settlements of this size remained steady at $850,000, following two consecutive quarters of solid annual growth, up 2.2 per cent in the December quarter 2017 and up 4.2 per cent in the March quarter 2018.”
Within this middle market, UDIA WA analysis showed Fremantle settlements sized between 750 – 2000 sq m had three consecutive quarters of solid growth, with a significant 31.3 per cent increase in the June quarter.
Belmont settlements of this size reached a peak of 42 in the March quarter following two consecutive quarters of relatively steady figures, a level which was returned to in the June quarter.
Strong quarterly price growth was experienced in Belmont throughout the 2017/18 financial year; following three consecutive quarters of annual price growth it settled at $547,500 for the June quarter (up 10.6 per cent).
In Victoria Park, the number of settlements for properties sized 750 – 2000 sq m recorded positive quarterly growth over the last three quarters to June, with a 16.7 per cent increase in the that quarter.
“What these figures show is that, where there are opportunities to purchase a decent sized parcel of land with small scale development potential, interest is certainly piqued,” Ms Hailes said.
The majority of the central local government areas examined exhibited positive growth rates in median price for the 2017/18 financial year for properties within the 750 – 2000 sq m range, with Bayswater at $609,150 (up 1.4 per cent), Belmont at $530,000 (up 4.7 per cent), Canning at $690,000 (up 1.8 per cent), East Fremantle at $1.41 million (up 4.4 per cent), Fremantle at $720,000 (up 5.9 per cent), and Victoria Park at $765,000 (up 0.3 per cent).
“We believe that these positive signs in the top end and middle ring infill development areas bode well for the new land market in greenfield areas around Perth which is still coasting along the bottom of this market cycle,” Ms Hailes said.
“As the established housing market continues to improve, we would expect new land to follow suit, as consumer confidence in the housing market returns.”