_Review of Perth apartment pipeline

Site Sales Volume

The volume of sales for development sites suitable for high-density apartments in Greater Perth was 1.3% lower in the year ending June 2019, with a total of $60.6 million.

Developer Nationalities

Analysing the disclosed purchasers of high-density developments sites by value, resulted with offshore buyers making up 19.9% of the mix over the two years ending June 2019. The most prominent nationality of offshore developers were from Malaysia (68.5%).

Site Values

The average sales rate for Greater Perth high-density residential sites was an indicative $50,200/per apartment at the end of June 2019, excluding CBD sites. This indicative rate has decreased 0.2% over the past year.

The range of development site values extended from $45,000 to $95,000/per apartment in Perth’s inner suburbs with an indicative rate of $60,100/per apartment in June 2019. At this time, middle suburbs recorded $15,000 to $75,000/per apartment, with an indicative rate of $46,700. Site values in the outer suburbs ranged from $10,500 to $28,000/per apartment (indicative of $20,800/per apartment).

Apartment Pipeline

By mid-2019, there had been 3,100 new apartments added to Perth’s housing supply since the start of 2018, with a further 2,025 apartments currently under construction due by the end of 2022. There are a further 3,800 apartments with DA approval currently being marketed, also forecast to be delivered within this timeframe.

The inner suburbs saw 2,430 apartments completed in 2018 and H1 2019 with a further 1,170 under construction and 1,800 being marketed due for completion by the end of 2022. By mid-2019, the middle suburbs saw the number of new apartments grow by 470 since January 2018. By the end of 2022, this is forecast to grow by another 830 apartments at construction stage and another 1,400 being sold off-the-plan. In the outer suburbs, 200 apartments completed in the eighteen months ending June 2019 and by the end of 2022, another 590 currently under construction or being marketed.

Bedroom Split

The distribution of bedrooms in Greater Perth apartments completed since 2015 have been weighted towards 2-bedrooms with 52% of the total share, followed by 1-bedrooms (35%), 3+ bedrooms (12%) and studios (1%). Under construction and due by the end of 2022, there has been a trend towards a lesser share of 3+ bedrooms (11%) and studios (0%) being built and more 1-bedrooms (37%) and similar share of 2-bedrooms (52%).

Construction Costs

The cost of construction in Greater Perth increased by an estimated 1.5% in the year ending June 2019. In 2019, it’s estimated the cost to build an apartment to a medium standard (with a balcony) ranges from $3,080/sqm to $3,655/sqm (plus GST), according to Rawlinsons. 

New Apartment Values

Greater Perth new mainstream apartments have remained steady over the year ending June 2019 at an indicative $7,700/sqm, currently ranging between an average of $5,900 and $11,300/sqm (excludes prime and CBD projects). 

Prices range from $6,000 to $11,300/sqm in the inner suburbs (indicative $8,300/sqm) as at June 2019. New apartments in the middle suburbs, were priced at an indicative $7,200/sqm (ranging from $6,300 to $8,900/sqm), whilst in the outer suburbs, an apartment could be purchased for an indicative $6,100/sqm (ranging from $5,900 to $6,400/sqm).

Offshore Buyers

Offshore buyers pay a duty surcharge for Western Australian apartments. This equates to 7% of the purchase price, in addition to standard state-based stamp duties and FIRB application fees.