2023-10-23-莱坊-Perth_New_Apartments_Insight_Q3_2023_5页_1mb

Perth New Apartments Insight Summary (Q3 2023)

Core Content

This report provides an analysis of the high-density residential development and new apartment market in Greater Perth, focusing on build-to-sell (BTS) products. It highlights trends in developer activity, construction costs, apartment sales and prices, rental market performance, and future forecasts.

Main Points

Developer Activity

• The volume share of residential development sites being purchased for high-density development in Greater Perth rose to 93.2% in the year to June 2023, up from 33.7% five years earlier and higher than 48.7% in the previous year.
• Building approvals for apartments in Greater Perth decreased by 49.1% between June 2022 and June 2023, with 1,473 apartments approved.
• Developer appetite for new apartments is significantly lower than the 4,637 apartments approved in the same period five years ago.

Cost of Construction

• The cost of construction in Greater Perth increased by 8.1% in the year to June 2023.
• The average cost for a standard finish apartment (with balcony) ranged from $2,905/sqm to $3,465/sqm (plus GST).
• For prestige finish apartments, the cost ranged from $4,270/sqm to $4,990/sqm.

Established Apartments Performance

• Sales volume for established apartments declined by 16.5% in the June 2023 quarter and by 3.1% annually.
• The average days on market for established apartments was 76 days in June 2023, up from 89 days one quarter earlier.
• Capital values for established apartments fell by 4.8% over the year to June 2023, with a 1.7% drop in the last quarter to a median value of $356,500.

Rental Market

• Gross rental yields for apartments increased by 7 bps to 6.58% in the June 2023 quarter.
• Rents increased by 6.7% for apartments and 20.0% over the past year, with a median rent of $480 per week.
• Residential rental vacancy in Greater Perth was 0.8% at the end of June 2023, down from 0.7% in the previous quarter and 1.1% one year ago.

New Apartments in Greater Perth

• High-density residential development site sales remain scarce, with a 29.5% annual decline in volume.
• Site prices for high-density developments fell by 1.2% over the past year, with no change in the June 2023 quarter.
• New apartment prices remained stable in the June 2023 quarter and over the past year, with an indicative price of $8,200/sqm.
• New apartment price performance is forecast to change by 1% at the end of 2023, 0% in 2024, and 0% in 2025.

New Apartments in Prime Regions

• Prime regions (Inner Perth, Inner South, South, and Western Suburbs) saw a 44% annual decline in high-density development site sales volume.
• Site prices in prime regions remained stable over the past year, with no change in the June 2023 quarter.
• New prime luxury apartment prices increased by 3.2% in June 2023, with an indicative price of $16,000/sqm.
• Price performance for prime luxury apartments is forecast to change by 3% in 2023, 2% in 2024, and 1% in 2025.

Market Forecasts

• Residential price performance is forecast to grow by 5% annually from 2023 to 2025.
• Residential rental market is expected to grow by 12% annually over the same period.
• The official cash rate is at 4.10% in September 2023, with a forecast of 3.40% by 2025.

Key Information

• International buyers accounted for 11.7% of new property sales in Western Australia in June 2023.
• Population growth in Greater Perth was 1.5% in 2022, with an annual forecast of 1.6% for 2025.
• Construction costs have significantly impacted developer activity, leading to a lower supply of new apartments.
• New apartment prices are expected to remain stable in the near future, despite the increase in luxury properties.

Summary Table

Conclusion

The new apartment market in Greater Perth continues to face challenges due to rising construction costs and limited supply, despite strong rental market performance and moderate price stability. Developer activity has increased, but the supply of new apartments remains below previous levels. Prime regions are seeing a decline in site sales and stable prices, while luxury apartments are experiencing price growth. The rental market remains robust, with low vacancy rates and increasing yields. Future forecasts suggest a gradual stabilization of prices and continued growth in the rental sector.