Strong sales for Perth apartments

Perth’s market for new apartments recorded its strongest quarter of sales activity since 2016, according to the latest research from property consultancy Urbis.

Urbis recorded 475 new apartment sales across Perth for Q2 2021, an uptick on preliminary data shared with Business News earlier this month.

That volume was higher than Q1 2021 results (414 sales) and surpassed the previous five-year high achieved in Urbis’s Apartment Essentials survey for Q4 2020.

Urbis director property, economics and market research, David Cresp said growing confidence in the Perth property market had underpinned strong demand.

That was reflected in a reversal of long-term trends, with Q2 2021 the first quarter where more apartments were sold off the plan or in buildings under construction (52 per cent) than in competed apartments.

There were 1,838 apartments completed and unsold at the start of 2020, according to Urbis, which dropped to 1,210 apartments at the end of June.

Owner occupiers dominated market activity for Q2 2021, representing 76 per cent of sales.

“Owner occupiers are now confident in being able to release equity when they sell their house and making a choice to right size either now or at some stage in the future when buying off the plan,” Mr Cresp said.

Local investor activity was low for the quarter, comprising 14 per cent of sales.

Meanwhile, interstate investors and offshore buyers each accounted for 5 per cent of sales for the quarter.

“The fact that almost $430 million dollars of apartments were sold in the quarter really highlights that the Perth apartment market is maturing and there is significant levels of demand for well located, well-designed and high-quality apartments in Perth,” Mr Cresp said.

Sales in off-the-plan projects were driven by the launch of new projects, according to Urbis’s research.

The three top-selling projects were launched during Q2 2021: Edge Visionary Living’s Lumiere in South Perth, The Freeman Residences by ADC_ in North Fremantle, and Edge Visionary Living’s Riviere development in Applecross.

Mr Cresp said buyers continued to focus on premium apartments in more affluent areas, lifting the average apartment sales price to $900,214; the highest ever recorded average sales price for the Apartment Essentials Survey, which began in Q3 2014.

“Whist apartment prices were starting to increase at this stage construction prices were increasing at a faster rate,” Mr Cresp said.

“This is putting a lot of pressure on apartment developers and whilst they were currently trying to hold prices at current levels, increased construction costs were going to force prices of new apartments up over the next 12 months.

“It is a really hard time for developers at the moment, they were racing to get the required levels of pre-sales before construction costs go up more than they have budgeted for.

“The rising costs of labor and materials are making it a very challenging market for developers and price increase will have to flow through to the apartments over the next 12 months.”

Urbis has forecast about 1,162 apartments to be completed in 2021; the lowest level recorded through this cycle and well below the peak levels achieved in 2017 (2,887).

A further 19 projects and 1,486 apartments are expected to be launched over the next 12 months.

The Q2 2021 Urbis Apartment Essentials research was compiled from a sample of 86 surveys conducted across the quarter.