- 475 sales the strongest quarter since 2016
- Owner-occupiers represented 76% of sales
- While apartment prices have gone up, construction costs have gone up faster
Demand for new apartments in Perth is booming. 475 sales were recorded in the June quarter of 2021, according to surveying conducted by property consultant Urbis.
This was the strongest sales quarter since 2016, which was preceded by 414 sales in the March (2021) quarter and 457 in December’s (2020).
Owner-occupiers dominated market activity, representing 76% of the June quarter sales.
Off the Plan
There are signs of changing trends, with the June quarter being the first where more apartments were sold off the plan or in buildings under construction (52%) than in apartments already completed.
The Urbis report said this is a sign in the confidence of the market going forward and shows developers can deliver on their commitments for quality.
Also, there has been a fall in the amount of completed and unsold apartments over the last year, while there were 1,838 apartments completed and unsold at the start of 2020, this has fallen to 1,210 apartments at the end of June 2021.
The report singled out three successful off-the-plan project launches: Edge Visionary Living’s Lumiere in South Perth and Riviere in Applecross along with ADC’s Freeman project in North Fremantle.
53% of the sales have been for projects Urbis classifies as high or luxury/premium developments, which has increased the average sale price to $900,214 – significantly higher than $633,206 seen previously.
“The demand for apartments continues to be strong and this is reflecting the growing confidence in the Perth property market,” said Urbis director, David Cresp.
“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.”
David Cresp, Urbis director
Mr Cresp did note that while apartment prices are on the rise, construction prices are increasing at a faster rate, which is putting a lot of pressure on apartment developers.
“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,” he said.
“The rising costs of labour 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.”
However, the number of completed apartments for 2021 (1,162) remains well below the 2,887 peak seen in 2017.
“The fact that almost $430 million dollars of apartments were sold in the quarter really highlights that the Perth apartment market is maturing and that there is significant levels of demand for well located, well designed and high quality apartments in Perth,” said Mr Cresp.