Top-end buyers drive solid inner-city apartment sales

The Perth market for inner-city apartments has defied concerns that rising prices and increased supply might result in Western Australia following other markets and experiencing a downturn.

Colliers International research consultancy manager, Erwin Edlinger, said there had been a big increase in apartment projects in the City of Perth since 2004, with evidence that absorption rates held up at least in the first half of 2007, after a strong sales year in 2006.

Almost 600 apartments, many in the East Perth area, were completed in 2006, with 95 per cent pre-sold off the plan.

“The first half of 2007 saw several large projects launched to the market, and despite fears of a downturn in the property market, sales to date for these projects have been surprisingly good,” Mr Edlinger reports in a recent analysis he prepared.

“But it must be noted that these projects are targeted towards the top end of the market, where activity by cashed-up baby boomers and investors have remained stable as opposed to the lower end of the market.”

Mr Edlinger reports that, in 2008, apartment completions will rise to 1,100, and then jump a further 15 per cent in 2009 to 1,270, a level of supply he cites as extremely high in the Perth context.

South Perth-based Finbar Group Ltd CEO, Darren Pateman, confirmed the inner-city market was still solid, though it had cooled from last year when developments would sell out in a weekend.

“We have all been spoiled for a few years,” Mr Pateman said.

“It is getting back to a more sustainable level of sales.”

He said the booming economy was having an impact, driving up construction prices that prompted developer caution, but also fuelling demand, especially in the inner city.

“Four hundred people a day are coming into the state,” he said.

“Because of that, rentals are still strong.”

Mr Pateman said Finbar had flagged to the market a proposed change at the East Perth Fairlanes site to an office project, but stressed the previously mooted residential complex remained an option at this stage.