WA Perth market 2019

Yeah I'm not quite following the call on those suburbs. The cynic in me notes that they are affordable for many investors and JM runs a BA firm (and property management) so recommending suburbs that are more affordable gets him more clients?

 

historically the data shows around 97% of approvals go ahead. I was surprised to find that even in a recession this doesnt change much, at least no more than uncertainties which come into the data from trying to estimate completion times. There is a dip in commencements following peak approvals as the market turns, but it is quite short lived. Developers seem to quickly react and not take things to market if they don't think they'll get a leg up.

What really surprised me is the disconnect between my perceived "omg so many projects being canned" and how few actually are. Seeing developments like 305 Stirling Street and 66 Wright Street not move, along with everything going on in South Perth actually all played a small role in total approvals vs. completions over the last few years.

Edit: i also think this is a reflection of the detached houses vs. units ratio in WA. Most houses go ahead quite fast, its typically units that stall. Detached are about 76% of the WA market right now, so even if 10% of all units were to be canned, that is only 2.4% of new supply

 

True, maybe it's my perception too and it's not statistically relevant. I feel like a lot doesn't happen but maybe it's just a ripple in the pond.

 

Was positive for my PPOR turned IP in Como also.
Leased after first home open for $10pw more than planned. PM said similar results for their other clients.

0 weeks downtime between new PPOR settlement and IP leasing which was very nice (although stressful as we had initially planned to move the following week)

 

For interest, here is a data dump of annual approvals and commencements. Not sure what would have been the easiest way to share it, but if you save this in a text file then open in Excel as "delimited - space" it will view as normal and you can make charts etc.

Otherwise just looking at the most recent 10 years or so you can see that since 2010 there has been 212k approvals and 209k commencements. Way closer than i was expecting when i first saw it!

Year Approvals Commencements
1992 21335 18831
1993 24397 22703
1994 26167 25408
1995 17436 17590
1996 15713 14333
1997 16462 15844
1998 19469 18389
1999 23226 20400
2000 17242 18273
2001 18238 16366
2002 20487 19232
2003 23226 21688
2004 23533 22580
2005 25029 24057
2006 26729 26308
2007 22918 22686
2008 21951 20620
2009 21764 20330
2010 24157 24799
2011 19849 19640
2012 21324 20546
2013 28586 26606
2014 32973 32514
2015 28340 28426
2016 21795 21354
2017 19494 19552
2018 15896 16087

 

Only 3000 between it - I can't believe it - yet it's there in black and white. I guess over that time projects that don't get the green light, phoenix up again and do something different. I'm still watching for some of those Momentum projects like 66 Wright Street Highgate to actually start. If I was in the syndicate I'd be pretty unhappy. I'm surprised I haven't seen a relaunch with the stamp duty savings incentive/

 

Yeah between that, 305 Stirling St, the old Beaufort Street Laundry and a few CBD-side of stirling street there's a fair bit hanging around that area. I suppose though even Beaufort 108 represents ~200 dwellings, that would take 15 of them to not go ahead to make up the difference

 

305 Stirling street was purchased by Woolworths along with 291 Stirling around last year and approval received a few months ago, I believe construction is starting for Woolworths Highgate early next year. Construction also starting at old Beaufort laundry early next year for a bunch of apartments, some retail and the original dry cleaners again on the bottom floor, cbd side of Stirling street is on hold but a fair few students starting to fill them out now, especially around old renovated Telstra building with bar and grocer store and I reckon once museum opens and city uni campus announced and committed we will see them restart, including 108 Beaufort and another on pier street. Delays with 66 Wright and demolition of Stirling towers is disappointing, mainly because land and building are both vacant, but they are both probably difficult developments because they are dependent on presales. Interesting to see when 66 wright starts up again, I agree with Westminster and I think Stirling towers needs property market generally to be on the up. A flat market like it’s been in Perth really delays things as there are generally no money in developments and other alternatives like less density options/townhouse development are more profitable relative to risk.

 

Population Data out this morning.

Grinding higher but from a very low base.

Net interstate migration having being deep in the red since 2014 is close to turning positive. I take that to mean that everyone who was going to leave has already left.

In any event, the big driver for WA is and always has been overseas migration and that is still way off the numbers from a few years ago. The State Government removing the migration restrictions it imposed in 2015 may help matters.

The graph above includes natural increase (deaths minus births). For the self interested property investor, those numbers are far less important than the migration numbers.

 

Woolworths are ramping it up! New Woolworths being built cnr Beaufort Street and Eighth Ave Inglewood also. Old Bunnings site

 

Jarrod reported previously, maybe a year ago that listings in Duncraig, Kingsley and other suburbs close to Mitchell Freeway were selling quickly. Maybe a flow on from that and affordability?

 

They didn't have a prescence in the area before, now they are competing with Coles (Inglewood and North Perth and IGA (Inglewood, Mt Lawley and corner of Beaufort and Newcastle).

 

Haha as opposed to the collectively minded or altruistic property investors?

Looks like population growth is trending at around 7500 - roughly half what it was through previous boom times of 2006-2013. Building approvals are down about 40% from what they averaged through that period (when Perth was undersupplied). I think we are now at a balanced market and hence won't see any further significant price falls across the board. Sure, units and apartments markets will continue to be oversupplied and weak for some time due to low immigration and the new OTP stamp duty concession, but detatched dwellings are a safe bet.

 

Sure. But investor demand is at rock bottom. In a buoyant market, investors make up a third of all new finance commitments (even higher during the madness of 2010 to 2014). That's a massive chunk of the demand side MIA.

 

Investors look at both CG and yields. There is strong evidence now of rents picking up, and vacancies falling and therefore higher yields. Melbourne and Sydney have had such strong price growth that I think investors will start looking at "less risky" options. Hobart (amazingly) now is considered risky due to the growth it's had recently. If, as you say, investor demand is at rock bottom then there's only one way for it to go...

I have just sold my Mandurah property off-market to an investor, for above my proposed asking price, who was simply looking for their money to produce a higher return than sitting in the bank. That's after it took me 6 months to sell a very similar house next door earlier this year for $25K less. And that's Mandurah! So I get the feeling there will be a lot more interest in Perth over the next couple of years. Obviously just an opinion.