Housing developers have taken a new approach in their efforts to compete with the established-home market, offering a range of inducements and incentives to prospective clients.
Housing developers have taken a new approach in their efforts to compete with the established-home market, offering a range of inducements and incentives to prospective clients.
Cash rebates, plasma TVs, air-conditioners, reticulation, water tanks, broadband internet, and even Italian espresso machines are some of the freebies developers are offering to try to entice new homebuyers back to the market.
Real Estate Institute of Western Australia president Rob Druitt said developers were caught in a situation where land and building costs were escalating while the value of some properties in the established market was falling, providing prospective buyers with more choice.
REIWA estimates there are now around 13,500 homes on the market, almost three times as many houses for sale than at the same time last year.
“Because the cost of land is so high and building costs are going up in the new housing market, developers are finding it hard to compete with the established market, so we’re seeing the incentives coming in,” he said.
“A lot of investors who bought cheap house-and-land packages before the boom are sitting on huge profits and are deciding to cash in, which makes it even harder.”
One developer trying to stand out from the crowd is PRM Property Group, which has increased its cash rebates from 3 per cent to 5 per cent on lots at its Meve Gold estate in Beeliar.
The rebate represents a saving of up to $19,900 on a 708 square metre block and is expected to be available for the rest of the year.
PRM development director Phillip Stannard said developers had to be responsive to the market as it continued to soften.
Mr Stannard said he had noticed lot prices were mostly holding because developers were choosing to offer added-value incentives rather than dropping their prices.
“We introduced the incentive five months ago when the market was hesitant because of speculation about stamp duty concessions. The rebate was essentially a neutralisation of that stamp duty component,” he told WA Business News.
“Now that it’s all passed, the rebate will be maintained as a reward for buyers who settle quickly.”
Peet Ltd managing director designate Brendan Gore said the company was also experiencing steady sales at estates from Burns Beach and Carramar in the north to Wellard and Lakelands in the south.
Mr Gore said Peet would continue to offer its ‘flying start’ packages, including incentives such as free landscaping, fencing and broadband connection in some estates.
“Peet has a program of steady releases of blocks at a number of estates and that’s being maintained in the wake of steady, ongoing demand,” he said.
“Our experience shows the days of selling out in one day and rapid price increases have ceased, but there is still a strong, underlying market for land driven by continued population growth in WA.”
Despite reports of house values dropping by up to $40,000 in some areas, Mr Druitt said the rationalisation of property prices at the tail-end of the boom had been and gone.
“It really is the cream coming off the top of the cake and this had to happen,” he said. “At the height of the boom, properties were worth over and way above their intrinsic value.”
Mr Druitt said falling prices in outer suburbs was not an ongoing trend and the state would return to more normal patterns of growth of between 8 per cent and 10 per cent in the second half of the year.
