Perth Highlight Report Q2 2013

The following Property Watch report is the result of an investigation into the historic and current market trends of Perth, Western Australia. This report analyses the house, unit and vacant land markets in Western Australias capital city and highlights key characteristics, demographics and performance of the local residential property market.

For the purposes of this report Perth has been divided into 3 distinct regions based on Local Government Area (LGA) boundaries. Central Perth (yellow) municipalities are comprised of the 19 localities within a 15 kilometre radius of the Perth CBD. Perths Regional Coast (green) includes to the north, Joondalup and Wanneroo as well as Cockburn, Kwinana and Rockingham along the southern coastline, and the Greater Eastern (red) municipalities include the geographically larger regions of Swan, Mundaring, Kalamunda, Armadale and Serpentine-Jarrahdale.

Perth, the fourth largest city in Australia, whilst geographically isolated from the remainder of Australia is easily accessed by the Perth International Airport to the citys east. The metropolitan area of Perth has evolved around the Swan River, where the CBD and established suburbs are located with 41 per cent house sales over the past five year period. This being said, the diverse scenery of the Western Australian landscape lends itself to a significant portion of Perths residential real estate to be located along the sprawling coastlines with 35 per cent of residential sales along the beaches to the north and south. The continual urban sprawl and increase in population has also led to a continual growth toward the eastern suburbs of Perth representing 24 per cent of the total house sales since the period ending March 2008.

Nationally, the past five years has generally been quiet for residential property markets; yet some regions like Perth have more recently shown a substantial improvement compared with the average number of transactions over this period. Based on the council level data there is a clear trend in Western Australian regions bouncing back to an above average rate of sale, particularly council regions within the Perth metropolitan area. Of the sixty council regions that were recording an above average number of sales over the year to March 2013; 37 (62%) were in Western Australia, 17 (28%) were in New South Wales, 3 (5%) were in the Northern Territory, 2 were in South Australia (3%) and 1 was in Queensland. This recent interest spike is aided by Perths mining industry, considered the main industry due to its locality within Australia.

The Perth Area rental median price as a whole has remained relatively robust over the past two years. The house rental market has seen a more generous spread of listings across the city with Central Perth registering 47 per cent of listings at Q1 2013 while the Regional Coast and Greater Eastern markets saw 35 per cent and 18 per cent respectively. Of the top performing house rental municipalities, Stirling recorded 10 per cent of the Perth citywide market while Swan ($430/wk) and Joondalup ($460/wk) in the northern suburbs recorded 385 and 456 listings respectively. The localities that witnessed the greatest median were all Central Perth waterfront suburbs including Nedlands ($710/wk), Cottesloe ($980/wk) and Claremont ($1,200/wk).

The unit rental market witnessed a largely condensed range with 86 per cent of all listings within the inner 15km radius of the Perth CBD. The four suburbs that encompass the Perth LGA made up 23 per cent of all listings city-wide and returned a median of $567/wk assuming a two bedroom unit. Stirling ($380/wk) recorded 17 per cent of all listings for Central Perth providing an affordable rental option within proximity to the Perth CBD. South Perth LGA rounded out the best performing regions with 400 listings at a median rental price of $400/wk.

Central Perth Market

The Central Perth house market has experienced an increase in demand since the period ending Q1 2008 noting a 6.1 per cent per annum increase closing the six month period to March 2013 with a house median price of $625,000. This median price market has only recently rebounded from the economic uncertainty soured by the Global Financial Crisis (GFC) which saw a noticeable median decline from Q1 2010 after peaking at $630,000 where the market is only now returning. When referring to the price point sales cycle, there is negligible deviation in appetite across all price points with only singular percentages differentiating; this being said the last six months period to March 2013 recorded a 29 per cent increase in sales compared to the five year average. This paired with the continual increase in consumer confidence and economic growth in Perth looks positive for Central Perths residential outlook heading toward 2014.

When analysed at a closer level for the five year period ending Q1 2013, the bulk of transactions in Central Perth have occurred in Stirling with 30 per cent of all house transactions, which was followed by Canning and Melville both recording 13 per cent of transactions. Cottesloe recorded the highest median price for suburbs with greater than one hundred transactions for the five year period reaching $1,800,000 followed by Nedlands ($1,545,000), Claremont ($1,310,000) and Mosman Park ($1,177,500). The most affordable house median price was recorded in Bassendean ($434,000), Belmont ($455,000) and Canning ($475,000). Small waterfront municipality of Peppermint Grove recorded a median of $3,800,000 with 81 sales ranging from $1.25M to $8.5M.

The Central Perth unit market has been trending similarly to that of the Central Perth house market except for a slight 0.3 per cent per annum sales decline since the period ending Q1 2008. Despite this plateaued interest in the unit market, the median price has remained consistent increasing only one per cent in the five year period, aligning with the negligible price point change in the proportion of total sales. This being said, the last six months to March 2013 recorded a 14 per cent increase on number of sales compared with the five year average of 3,197 transactions per half year period.

When analysed at a closer level up to the five year period ending Q1 2013, the bulk of unit transactions in Central Perth occurred in Stirling with 28 per cent of all transactions, which was followed by Perth with 14 per cent and Vincent and Bayswater both with 7 per cent of the transactional market. Perth municipality recorded the highest median price for suburbs with greater than five per cent of unit transactions reaching $510,000 followed by South Perth ($480,000), Vincent ($440,000) and Melville ($438,000).

Regional Coast & Greater Eastern Market

Perth municipalities within the Greater East and Regional Coast regions, outside of a fifteen kilometre radius of the Perth CBD, have seen similar trends with regard to house sales over the past decade since March 2003. The Regional Coast market has recorded a $35,000 larger median price at the close of Q1 2013 mainly due to the regions desired waterfront localities resulting in a five per cent greater proportion of sales greater than $500,000. This being said, the Greater Eastern market has remained competitive with notoriously larger lots and lifestyle residential opportunities thus registering greater growth in median price and transactions numbers over the past decade. The Regional Coast and Greater Eastern house markets when compared to the Central Perth market have experienced far less median price volatility through the uncertain times aligned with the GFC with both regions recording 5.4 per cent and 6.9 per cent increases in transactions respectively, closing the first quarter of 2013 with median prices at $465,000 and $430,000.

In terms of popular municipalities, Gosnells and Swan in Perths Greater East as well as Regional Coastline municipalities of Joondalup and Wanneroo have both dominated house transactions registering 57 per cent of their respective markets. Interestingly, the number of sales in Perths Greater East has been dominated by regions with larger proportion of smaller lots with Swan and Gosnells municipalities registering median lot sizes of 618 and 680m2 respectively. The Regional Coast which closed of a median price of $465,000 at Q1 2013 is noticeable divided by the Swan Rivers convergence with the Indian Ocean to the North and South, with the northern municipalities providing a median price of $478,000 while the southern coastline municipalities recorded noticeably less with $382,500.

Similar to the housing market outside of the immediate 15 kilometres of Perths CBD, the regional areas of Perth have responding accordingly in terms of unit transactions and median price, despite registering comparatively smaller numbers to that of house markets. Despite the Regional Coast unit market recording a higher price point in the most part, both areas have registered a strengthening in the entry level markets under $200,000 registering a seven per cent increase in the Greater East and four per cent along the Regional Coast.

Since the six month period to March 2008 the Regional Coasts Joondalup municipality recorded the highest median price reaching $380,000 followed by Cockburn ($360,000) and Wanneroo ($333,000). The Greater East municipalities highest median unit price was found to be $322,000 in Swan, closely followed by Kalamunda ($306,866) and Gosnells ($297,000). The most affordable units were found in Regional Coast municipality of Kwinana ($195,000) and Mundaring ($232,750) located outside the Perth international Airport in the cities Greater East.

With substantial increase in activity over the past twelve months since March 2012, the Regional Coast (26.6 per cent) and Greater East (27.6 per cent) unit markets anticipate further positive movement in the median price after closing the Q1 2013 period at $340,000 and $310,000 respectively.

Perth Vacant Land Markets

The City of Perth has witnessed a consistent breakdown in terms of where vacant land sales have been occurring in the five year period to March 2013 with the Regional Coast recording 50 per cent of all vacant land sales. The Greater East caters the large proportion of large lot sales (> 1,000m2) controlling 35 per cent market share while the Central Perth vacant land market only meets 15 per cent of the vacant land market.

Due to Central Perth already being largely developed, it was noted that the number of vacant land sales were proportionately less than that of the Regional Coast and Greater East, and where Central Perth saw its largest ratio of vacant land transactions were in the under 500m2 category. This has resulted in the Central Perth vacant land market, paired with its proximity to the Perth CBD, providing more of an unstable median price.

The Regional Coast recorded the greatest activity for land under 750m2 with 53 per cent of all vacant land transactions occurring in this market while the Greater East made up 57 per cent of all vacant land sold over 1,000m2. The vacant land median price at the six month period ending March 2013 noted a negligible difference ($1,000) between these two regional markets of Perth. This is due to the Greater East ($245,000 median) having a largely dominant (53 per cent) vacant land market between $200,000 and $299,999 while the Regional Coast recorded larger proportions of buyers at either end of the purchasing spectrum including 33 per cent of sales less than $200,000 as well as a slightly larger proportion of high-end vacant land sales greater than $450,000, leading to a central median price of $246,000.