Apartment Buyers Pounce
While COVID-19 has sent ripples throughout all sectors of the real estate market, Managing Director of Match parent company M/Group Lloyd Clark said that the negatives would be short-lived, while the positives would have a longer-lasting impact for the apartment sector.
“Just as quickly as Perth moved through the restrictions, enquiries returned,” he said. “The disruption had significantly less impact than initially anticipated,”
“Firstly, we saw the apartment industry reinvent itself to provide highly digitalised access to apartment spaces.”
“Equally, our market became adept at reviewing possible investment opportunities online.”
“For a sector that deals significantly with off-the-plan products, this was really a watershed moment, and when enquiries returned, these people were highly qualified and informed buyers.”
Mr Clark said the pandemic has created a much-needed shift in a market that has become a little congested with speculative developers on projects that may or may not have come to fruition.
“It allowed everyone in the industry to review risks and introduce risk aversion strategies,” he said.
“What this means for apartment buyers is some developers may have reconsidered their position in terms of new project development, and off-the-plan deposits can now be redirected to solid operators such as Match, which has demonstrated time and again resilience in varying market conditions.”
Edge Visionary Living Managing Director Gavin Hawkins said the developer also witness a spike in enquiries as restrictions started to lift.
“We have seen a huge spike in enquiry as COVID-19 restrictions have eased, and especially following the new government incentive announcements,” he said.
“With equity markets now above where they were little more than 12 months ago, the initial fears have dissipated and buyer confidence within the sector is returning strongly.”
The apartment market had a big change-up in May of this year when new strata reforms came into place offering a variety of changes to how strata acts operate.
From 10-year maintenance plans, to minimum education for strata managers and a more efficient dispute resolution process, it was the largest shake up in decades and one Mr Hawkins said was a plus for buyers.
“It certainly allows for more flexibility in providing a co-ordinated, staged approach to developments,” he said.
“The key take-out, however, is providing more clarity and protections for the buyers which is obviously a good thing for both buyers and the sector.”
Mr Clark said many byers were unaware of recently available stamp duty rebates when buying an apartment.
“This will help purchasers buy into under-construction apartments, as well as pre-construction,” he said.
“This means purchasers can take advantage of the stamp duty rebates and other incentives and may not have to wait prolonged periods to move into an apartment.”
The value of apartments has remained relatively steady over the last ten years, falling just 0.7 per cent in Greater Perth over the period, according to REIWA data, with the median sale price for the year to March 2020 recorded at $378,000. The median unit rental price for March was $340.
The suburb of Perth recorded the most unit sales in the year to March, with 264, closely followed by East Perth (245). Near city suburbs Scarborough (210), South Perth (209) and Maylands (180) rounded out the top 5.
Outer-ring suburbs Rockingham and Mandurah also saw high levels of activity, with 115 and 108 sales respectively.
In terms of sales value, only two sub-regional markets saw an increase over the year to March, with the Perth South West market realising an increase of 2.6 per cent and Mandurah boasting a massive increase of 17.3 per cent.
South Perth witness the biggest apartment sale price of $7,150,000in the year to March while Dalkeith the lower quartile, median and higher quartile sales were all in the million dollar range, with the wealthy suburb recording and 37.3 per cent spike in prices for the year to March. The opposite was true in Crawley which witnessed an equal fall over the period.
Excerpt from The West Australian Property Report, 20 June 2020
Not All Land Estates Are The Same
Read moreNot All Land Estates Are The Same
How to make your Government incentives work harder for you
It’s an exciting time for land buyers! Government incentives have made it the most affordable time to build your own home in over a decade, and land options are plentiful across all four corridors of Perth’s metropolitan areas.
But before you dive into making the dream of building your own home a reality, it’s important to consider the long term value prospects of this extremely rare opportunity.
According to Mr John Wroth, Director of Monument parent company M/Group, your choice of estate today could have a massive impact on how much the home delivers in the future.
“These are unprecedented times for those looking to build their own home. The Government incentives could effectively save up to $70k on a house and land package, and we are already experiencing the thrust of buyers wanting to take advantage of the opportunities,” he said.
“However, not all land estates are the same and there are clear indicators that you can look for in an estate now that will give you a higher return when you’re ready to sell in the future.”
Here’s how you can increase the value of your Government incentives.
Stay close to the action
Homes in the inner suburbs of the city will invariably attract higher values than those on the fringes.
Equally, as the population grows and subdivisions expand, the inner suburbs will become more sought-after due to the limited supply of land availability.
People will always want to live closer to the action, and the closer you are, the higher the price you will achieve.
Look for good amenity
Being close to shopping centres, schools, transport and community infrastructure, such as parks and walking trails, will always add value to a home.
Today, some developers are investing a great deal into high-quality amenity and facilities that not only attract a thriving community but also gives residents a broader lifestyle experience that extends beyond their four walls.
Find something special
If an estate stands out for you now, chances are the future buyer of your home will feel the same.
Take notice of carefully considered features within an environment that help to create an important point of difference. This could be the deciding factor between your home and another when someone is considering a purchase.
Also make sure the estate isn’t too large. An over-supply of similar stock will increase the competition when your home hits the market.
Fastrack your investment potential
It’s easy to be swept away by the potential of an estate, but how long will it take to get the promised amenity.
Most estates progress in line with the number of lots sold, which means earmarked shopping centres and schools may be pushed out longer than you anticipate depending on market factors.
Ideally, find a location with established infrastructure. This will not only give you immediate access to the benefits the amenity provides, but also the assurance that your home ‘package’ is ready for sale when you choose to hand it over.
Not all estates are the same. Monument is a boutique land developer that offers infill land sites within established areas. It prides itself on delivering a well-considered development design that introduces something unique and special into the marketplace – enhancing future resale or rental prospects.
“Monument tries to tick all the boxes in terms of maintaining and improving property values for its owners. We design our estates around the environment’s natural topography, materials, rocks, trees and other plant life and we are always looking for ways to weave creativity and interest throughout our developments,” Mr Wroth continued.
“Our estates continue to attract a great deal of attention and it’s an added bonus to us that we can future-proof our buyers’ investment.”
Monument’s current land portfolio includes The Wedge in Wellard North, Atop in Beeliar and Hamelin Park in the coastal community of Secret Harbour with other opportunities coming on board in the near future.
For more information visit www.landbymonument.com.au.
Can isolation inoculation hold for apartments?
Read moreCan isolation inoculation hold for apartments?
Prices and sales of apartments are stable, but developers are calling for more stamp duty reform.
Western Australia’s property developers hope the physical isolation that has helped mitigate the worst of COVID-19 in this state will also insulate the local apartment market from a contagion of a different kind.
While sales of off-the-plan apartments on the east coast are reportedly down 15 per cent or more in recent weeks, that trend is yet to fully materialise in Perth, at least anecdotally.
Apartments in central Perth have remained relatively resilient during the past three years in terms of maintaining their resale values, according to research analysts PropertyESP.
Director Samantha Reece said this resilience, paired with Perth’s location, had so far buffered the market from the economic fallout of COVID-19.
“For the first time in history we are actually glad that we’re isolated,” Ms Reece told Business News.
“While there will be some national companies that feel the effect from the east coast – there is a bit more of a lag happening there than here – those companies based in WA, I believe, will actually continue on business as usual.”
That appears to be the case for Subiaco-based Stirling Capital, which recently achieved practical completion at its 26 on Charles mixed-use development in South Perth.
Stirling Capital sales and marketing director Daniel-Paul Filippi said just a small number of the 28 boutique apartments and four levels of commercial office space remained for sale.
“In terms of valuations, we’ve had zero impact,” Mr Filippi told Business News.
“I’ve had all the major valuers through our Charles Street project and we’ve had no problem.
“People are waiting to see if there’s going to be those sorts of big drops that have been reported [on the east coast]. We didn’t have a lot of foreign buyers anyway, so I don’t see as much impact.”
Mr Filippi said the market’s saving grace could be the resources sector, as one of the key drivers of the state’s economic activity.
“The fact is, WA is still ticking along, so everything is indicating that maybe WA and Darwin will be the least affected by all of this,” he said.
M/Group managing director Lloyd Clark said there had been less disruption on projects than initially anticipated, with inquiries returning just as quickly as Perth moved through the easing of restrictions. Mr Clark said inquiries had also tended to be more qualified and ready to buy.
Given that market confidence, the group is pushing ahead with plans to start construction on its M/27 apartment development in Fremantle.
“In terms of valuation, Perth is in a unique position comparative to the rest of Australia,” Mr Clark said.
“Our property values were already at the lower end of the property cycle, and apartment prices currently represent excellent value for money.
“While the fallout of the pandemic might create value variances in other states, I believe it is unlikely in Perth.
“In light of the activity over the last few months, I would expect to see apartment prices on our projects hold as the market restabilises and returns to growth in 2021.”
M/Group is progressing plans to start construction on its M/27 40-apartment development in Fremantle.
Apartment developer Paul Blackburne is also expecting prices to remain steady, and said COVID-19 had not yet affected sales, with most of his apartment stock already sold.
Blackburne’s Marina East development, located in Ascot Waters, finished construction in May with 80 per cent of apartments sold.
“The past 12 months have been our highest-selling year on record with $203 million in sales in just the first nine months,” Mr Blackburne told Business News.
“Now that things are opening up more and the major threat of the crisis is most likely over, people have started buying in larger volumes.
“Prices had gone up for four months in a row. The next year would have seen 3 to 5 per cent growth.”
Outlook Data compiled by real estate services firm JLL revealed that apartment sales in the inner city were down 3.9 per cent in the 12 months to the fourth quarter of 2019.
However, apartment sales activity was up 12.5 per cent in the fourth quarter on the preceding three months.
JLL manager of strategic research Ronak Bhimjiani said this had most likely been fuelled by the 75 per cent stamp duty rebate on off-the-plan purchases.
Additionally, Mr Bhimjiani said apartment values increased by 1.7 per cent in Perth between November 2019 and February 2020, a figure not seen since mid-2013 during the peak of the resources boom.
“The long-awaited recovery in Perth’s apartment market is likely to be delayed, as COVID-19 keeps conditions challenging in the short term,” he said.
“However, it is important to note that current economic and property market data does not yet fully capture the full impact of COVID-19.”
Any anticipated drop in demand could be partially offset by supply, with construction expected to cool off beyond 2020.
Mr Bhimjiani said there were about 380 apartments across a handful of smaller boutique developments likely to be completed in 2021.
Meanwhile, for larger developments previously set for 2021 completion, he said project timelines had been pushed out to 2022, with further economic uncertainty potentially limiting new starts.
“Many of these projects that are in the early stages of marketing or at the development approval stage could slip into later years or be abandoned if sufficient pre-sales are not achieved and economic conditions do not improve,” Mr Bhimjiani said.
“The impact on pricing will ultimately be dependent on the supply versus demand dynamics in the Perth apartment market.”
Finbar managing director Darren Pateman said stamp duty relief would be the best way to boast sales and development activity.
The ASX-listed property development company recently announced it had completed construction of its One Kennedy Maylands project, with sales of $23.5 million secured to date, representing 43 per cent of apartments.
Mr Pateman said there hadn’t been any immediate shift in apartment values, with all recent Finbar contracts at pre-COVID-19 pricing.
“The Perth market was already at one of its most affordable levels pre-COVID, in contrast perhaps to eastern states markets, which were experiencing far higher levels of growth,” Mr Pateman told Business News.
“WA has done it tough for near on five years and pre-COVID we were clearly entering a recovery phase, while eastern states markets have been boiling over for some time.
“Extending the stamp duty rebate beyond off-the-plan sales to projects under construction and new completed stock to encourage commencements will allow vital capital to be redirected to new job creating projects for thousands of Western Australians.”
Mr Pateman said this would help revive the WA economy as it moved into the recovery phase post COVID-19.
Mr Blackburne shared similar thoughts and said further stamp duty reform could also lead to long-term reductions in local council rates, with the greater rates flowing from higher-density developments better supporting council operations and budgets.
Mr Clark agreed and said the role of government was critical to maintaining buyer confidence, which could be achieved by additional stamp duty relief by way of rebate or discount.
“This is about keeping the market moving in the right direction and buyer incentives are proven and successful in this space,” he said.
“Government and industry alike have a significant role to play here.”
Business News – Katie McDonald, Thursday, 4 June, 2020
Subiaco offices at unrepeatable value
Read moreSubiaco offices at unrepeatable value
Why rent when it’s cheaper to buy, says Amanda Spagnolo, who is selling two new offices at 217 Hay Street, Subiaco. “It is remarkable value for prime commercial real estate,” Amanda, project sales manager at M/Property, said.
They are the last remaining offices in the Rhythm by Match building, which has a total of 27 commercial offices and 9 apartments. Priced from $285,000 plus GST, No.11 is 75sq.m and comes with a car bay. No.18 is slightly bigger and has two bays. The 87sq.m office is on the market from $335,000 plus GST. “They are being offered at well below replacement value, creating an incredible opportunity for the future,” Amanda said. “Both have never been occupied so are brand new ready to fit out as desired.”
Other tenants in the building include a newsagent with a licensed post office, accountant, life coach, real estate agent and a beauty salon. The architect-designed building stands out from other commercial offices in the strip because of its timber-cladded façade. At its centre is a patterned, perforated screen that provides natural light into the common areas. For more details, phone Amanda on 0432 660 066 or info@itsamatch.com.au
The Wedge Wellard | Land by Monument | Progress Update | April 2020
Read moreThe Wedge Wellard | Land by Monument | Progress Update | April 2020
Construction on Stage 2 is underway and houses in Stage 1 are already being built ready for new residents to move in.
Find out more about The Wedge visit www.thewedgewellard.com.au/
Atop Beeliar | Stage 2 Construction Update | April 2020
Read moreAtop Beeliar | Stage 2 Construction Update | April 2020
Construction works are finalised on Stage 2 at Atop Beeliar with progress occurring on Stage 3 ready for release.
For more information visit www.atopbeeliar.com.au