Perth new apartment market records strongest quarter since 2016
The Perth new apartment market recorded 426 sales in Quarter 4, 2020 based on surveying by leading property consultant Urbis. This is the highest level of sales recorded since the first quarter of 2016. The strong pick up in activity is on the back of Perth’s strong established housing market. In 2020, the Perth Apartment Essentials recorded a total of 1,187 sales, compared to 981 sales in 2019.
Whilst the apartment market has not seen the huge boost that the government incentives in the house and land market got in 2020, that led to record levels of land sales, the market is benefiting from increased confidence generally in the housing market and people making decisions before prices increase in 2021.
This quarter’s sales activity got a boost with many of the 110 apartments that Foundation Housing bought falling into Quarter 4 2020. However, developers are already reporting that momentum has accelerated and Q1 2021 is looking like it will also see very solid levels of activity.
Activity in the Perth apartment market continues to be driven by owner occupiers, with owner occupier accounting for 69% of surveyed sales in the quarter. In 2020, owner occupier sales amounted to 72% of surveyed sales, up from 62% in 2019 and 58% in 2018. The level of investor activity in the Perth market is well below other states with 53% of buyers in the Brisbane market being investors in Q4 2020, 49% in Melbourne and 42% in Sydney.
The lack of migration and also the foreign buyer tax has continued to see a very low level of sales to off shore buyers in the apartment market. In 2019, Foreign Investors accounted for 19% of surveyed apartment sales, this has dropped to 6% in 2020.
2020 Q4 saw a higher proportion of sales come from off the plan sales than had been seen for some time, with 25% of surveyed sales in developments still in a presales stage. This is up from 12% in the first quarter of 2020.
Developers are responding to increased levels of demand and 5 projects were launched in 2020 Q4 in a variety of locations. This increased from 3 project launches per quarter in the previous two quarters. Partly the increase was due to project launches being held off earlier in 2020 due to uncertainty around the impacts of COVID. However, the Perth market has proved resilient despite COVID: David Cresp, Director at Urbis said, “Last year many apartment project launches were delayed until late in the year. However, the strong residential market is meaning that the project launches were now picking up and on top of the five projects launched in Q4, 2020 there were another seven projects that will be launched by the end of Q1 2021. The new launches are seeing a strong reaction in the market and projects are achieving good levels of pre-sales.”.
Whilst demand was picking up the number of apartments that are expected to be completed in 2021 will be the lowest level for some years with 1,258 apartments forecast to be completed in 2021 compared to 1,673 in 2020 and 2,102 in 2019.
Mr Cresp concluded, “On the back of a strong residential market the apartment market has become a lot more active in 2021. A lot of people have been considering downsizing, but they have not been happy with the prices that they have been able to get for their own house, so any move has been put off. Now that prices for existing housing are recovering there is a lot of pent-up demand from downsizers and some very good options for them to select from. This will see activity continue to see owner occupier activity pick up again in 2021.
A big issue for new developments is that construction costs are starting to increase, and this will put pressure for developers to increase prices for new developments.”
Urbis Perth Apartment Essentials Q4 2020 Snapshot
The Perth Apartment Essentials Report found:
- 426 sales were recorded from a sample of 89 surveys in Quarter 4, 2020. This is the highest level of sales recorded since the first quarter of 2016.
- The Other areas recorded the highest level of sales at 84 sales, followed by the Fringe-South (72 sales) and Fringe - North West (71 sales).
- The weighted average sales price for Quarter 4 2020 was $624,267. This is inline with the previous quarter’s result of $622,647.
- Two-bedroom two-bathroom product made up the majority of sales at 44% of total sales.
- Owner occupier sales dominated the market with 69% of transactions. In 2020, Owner Occupiers accounted for 72% of sales compared to 58% in 2018.
For media enquiries contact:
David Cresp, Director - Property Economics and Research
Ph: 08 9346 0503 E: email@example.com
About Urbis Apartment Essentials
The Urbis Apartment Market Essentials is the most comprehensive national survey in Australia, and the only survey for which the sales data for apartment projects with 25 or more units is collected at the time of contract rather than at settlement.
Projects with 25 apartments or more are tracked from initial application through to the building being sold out for projects across Brisbane and key areas of density across Sydney, Melbourne, Perth and Gold Coast. As well as tracking the status of 937 developments Urbis receives surveys from 242 apartment developments.