February 5 has come and gone and WA’s hard border remains firmly in place. With uncertainty surrounding an opening date, what will this mean for the Perth property market?
With a combined 55 years' experience in property development, Adrian Johnson, Quentin Lau and Ewan McConnell of Summit Developments weigh in on the effect premier Mark McGowan’s decision may have on our property industry.
Last month, Premier Mark McGowan announced WA borders would not be reopening on the anticipated February 5 date. This coincided with Corelogic’s data which showed a 0.6% rise in property prices for January. The new figures bumped Perth’s median house price to $531,243 - up from $524,589 in 2021.
“A strong result in the property market for January, even after the Premier’s announcement, really shows that demand isn’t going anywhere,” said Ewan.
REIWA President Damian Collins also remains confident Perth prices will achieve the REIWA forecasted 10 per cent growth considering the strong results of January which is historically known as a quiet month. In January, the median selling time was 15 days.
“We’d normally expect this figure to be up around the 30 to 40 days, so the fact it continues to hover around the 2-week mark is testament to how tight the competition for properties is in Perth,’ Mr Collins said.
“Right now the Perth market is still very strong coming off a very solid 2021…The border delay is really just kicking things down the road, when the borders do open, we will certainly see more international and interstate investment in residential property.”
Quentin agrees: “Postponing the border opening has only amplified demand, particularly from national buyers. According to our real estate division Summit Realty, as well as multiple agents across Perth, over the past three months, at least 30 per cent of residential purchases have come from the east coast.
“Once borders reopen, we anticipate a surge of people travelling to WA to view property before they buy, and thus investors re-entering the Perth property market. From the figures we are seeing, we don’t anticipate a slowdown in demand.”
With trade shortages affecting building timeframes and placing upwards pressure on prices Adrian says it is important to keep perspective.
“Summit Developments is currently running on an average industry build timeframe and build prices are still under 2014 prices, however this will change over the year with prices only going up in the future.”
Rent prices are also tipped to rise 10-15% this year, making buying fast becoming the only viable option. However, the demand for houses is not one that has been shared with units.
The disparity in demand between units and houses is the greatest it has ever been, even in the current state of property shortages with demand for apartments relatively weak.
“People want a house with land. If the pandemic has highlighted anything it’s the fact that we need more space in our homes for our physical and mental wellbeing,” said Adrian.
“We have a clear strong demand for properties with land content. We need more infill redevelopments such as rear strata, duplexes, triplexes and townhouses.”
Adds Ewan: “Any good investor or property developer knows the value is in the land. Property owners may wish to consider using equity to build a property portfolio by developing their existing land holdings.
Developments such as duplexes or triplexes could be staged, based on available funding capabilities and valuations, so owners can quickly capitalise on the current market demand.”
Ewan, Quentin and Adrian collectively have over five decades of experience in property development.
They know how to strategically design to budget, maximise the land potential, and ensure profitability.
From first time investors, to seasoned property developers, they have assisted more than 1,400 clients profit from developing their block, while making the development journey smooth and efficient.
The team is optimistic that continued strong demand coupled with WA’s robust economy will equate to a strong 2022 for the WA property market.
Visit summithomes.com.au/develop to get in touch with Ewan, Quentin and Adrian.
