04/06/2008 - 22:00

Perth unit buyers pay top dollar as sector slows

04/06/2008 - 22:00

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After a year of strong growth, Perth's unit market has started to plateau, according to figures from national property agency RP Data.

Perth unit buyers pay top dollar as sector slows

After a year of strong growth, Perth's unit market has started to plateau, according to figures from national property agency RP Data.

Perth's median unit price is currently sitting at $449,754, down 1.35 per cent in the year to the end of March, but above Sydney's median of $413,829.

While Perth has retained its position as the most expensive unit market in Australia - first achieved when it overtook Sydney in May 2006 - there are marked differences between suburbs in terms of growth.

In particular, areas with a typically high percentage of unit accommodation have shown the biggest retraction in price over the past year.

Burswood has been one of the worst performers, down 9.7 per cent in the 12 months to March.

The CBD's fringe suburbs, traditionally strong performers, have also experienced falls well above the average, with North Perth and East Perth down by 5.7 and 6.3 per cent, respectively.

East Fremantle, Highgate and Armadale have all slipped between about 2 and 3 per cent.

At the other end of the market, Shenton Park's median unit price has improved by nearly 25 per cent in the past year, followed closely by Inglewood (up 22.7 per cent) and Subiaco (up 21.3 per cent).

RP Data research analyst Cameron Kusher said the figures showed buyers were being more selective.

"The Perth market seems to be operating a bit differently to other eastern states markets, probably due to a discrepancy in the quality of stock," Mr Kusher said.

"Perth is lagging a little behind the eastern seaboard in developing its inner-city market. Most inner-city areas over east have had an injection of new stock, and Perth hasn't really seen that."

Mr Kusher said East Perth, which has a median unit price of $261,000, was one area likely to pick up once urban renewal projects began.

"I think once that redevelopment kicks off, you'll see that price go up, but investors are probably going to be a bit wary until then," he said.

Sales of older stock are believed to have helped push West Perth's growth rate to 21.1 per cent.

The suburb currently has a median unit price of $290,000.

Overall, the Perth unit market has slowed slightly since January, with the average listing time stretching out to 41 days in March, from 38 days at the start of the year.

This is still better than the 52-day average posted in March last year.

However, at the top end of the market, growth has been exceptionally strong over the past year.

RP Data's survey of 88 apartment developments in Australia showed Perth had three projects in the top 10, based on annual capital growth, in 2007.

The Moorings in North Fremantle was the nation's leading development, with a median capital growth of 29.3 per cent last year.

East Perth's Westralian apartments were ranked third, with a growth rate of 19.4 per cent, while the Raffles apartments posted a median growth of 12 per cent - the sixth best rate nationally.

Mr Kusher said growth over the next 12 months was expected to be much slower.

"Our feeling is the Perth market tended to overshoot the mark a bit. Growth has now slowed quite substantially, and that's just the natural response of a market that grew too quickly," he said.

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