New apartments making gains

Apartment developers are making small but incremental gains into Perth’s new-build housing market and, according to Urbis, the sector is broadening with apartments under way in more suburbs as developers refine their projects.

Urbis director David Cresp said 50 developers, ranging from those with a single apartment project to developers with multiple projects, were working on apartment developments in Perth.

“The last time we saw this many apartments planned was around 2008 when there were projects in 14 areas, now there are apartment projects in 23 areas, ” Mr Cresp said.

“While we have a broader and more diverse apartment market than in the past, a lot of the new areas still have a limited number of approvals.

“When you go to areas that have more than 100 approvals we are looking at six areas plus the CBD.”

Despite their high-profile locations and perceptions that apartments are a major market force, they represent a small part of Perth’s housing market.

According to the Australian Bureau of Statistics, in the past 10 years, the proportion of the new dwelling market occupied by apartments in Perth climbed from just 9 per cent to 13 per cent, putting Perth a long way behind Sydney, where apartments are 60 per cent of new dwellings, Brisbane at 40 per cent and Melbourne at 36 per cent.

“Part of the problem with apartments is that they are so big and visible that they draw a lot of attention but most people don’t see the tens of thousands of new homes, many that are on the urban fringes, that we build every year, ” Mr Cresp said.

“We are producing an incredibly low level of apartments and Perth is really the last bastion of the single residential lot.

“While we don’t see Perth jumping to the levels of the Eastern States capitals, we are definitely seeing the start of a long-term trend where apartments make up an increasing proportion of new dwellings.”

Much of planning for Perth’s metropolitan area and Peel is based on a population of 2.2 million by 2031 and 3.5 million by 2050 where apartment living would play a greater role.

Mr Cresp said the increasing supply meant buyers had opportunities to buy well-located apartments near employment, transport hubs and entertainment precincts.

“What we know is that as supply increases, developers will need to be strategic about the product they choose to bring to market, ” he said.

“We’re seeing a lot of one and two-bedroom apartments selling in the first half of this year, however, in the right areas, there has been strong demand for three-bedroom product as baby boomers looking to downsize have come to the market.”