BUYERS in Perth’s unit market have been urged to be wary of some “considerable” incentives on offer for new and off-the-plan apartments, and there are calls for long-term planning of medium-density dwellings through the middle suburbs to tackle supply issues.
The warning for unit purchasers came from LMW’s Residential Market Indicator for June, which said “buyers are active and developers are creative”.
Among the “considerable” incentives are “anything from cash back, rental guarantees, stamp duty concessions, holidays, cars, boats, etc., which can amount to anywhere between 5% to 15% of the purchase price and should be mindful that the asking prices on these properties could be inflated.”
While some Perth suburbs are showing healthy recovery and, in some cases, capital growth, others remain in decline in what has been broadly a struggling market.
Unit supply across Perth is “more than double what it should be”, according to LMW, although this is largely concentrated to the CBD being West Perth, Perth, East Perth and Northbridge, where the bulk of high-rise, high-density stock exists.
Values are falling in outer developing suburbs in the north, south and south east corridors such as Cockburn, Rockingham, Armadale, Butler and Alkimos, which feature lower density, low-rise development, but weak demand has led to excess supply.
“The unit market through western suburbs, inner north coastal and southern riverfront in suburbs such as Swanboure, West Leederville, North Fremantle, Bicton, Applecross is healthy at present given these suburbs largely offer low-density, quality infill unit development,” LMW said.
According to RiskWise Property Research chief executive Doron Peleg, “One of the high risks for the property market lies with units in Western Australia due to oversupply and the large number still in the pipeline”.
Peleg said a strategic plan for dwelling demand and supply should be implemented.
“Housing policies should include specific actions to limit the current oversupply of dwellings, particularly units, on one hand, and to ensure the appropriate level of supply in the long term.
“But it’s important to note that supply must be measured and addressed separately for each area (suburb, postcode or SA4) to ensure there is effective long-term planning.”
Stamp duty concessions for first home buyers and downsizers should be continued in the short-term, and further incentives for first home buyers should be looked into where affordability challenges were not acute and where markets were experiencing significant declines.
Policies such as The National Rental Affordability Scheme, which look to promote affordable rental housing by offering financial incentives to developers and owners to build and rent dwellings to low and moderate income households at below-market rates for 10 years should be developed.
He said after addressing the current issues of dwelling oversupply, a long-term strategy should be put in place to include measurements to ensure sufficient and appropriate long-term supply of properties that are suitable for families with three to four bedrooms and a yard, close to school and good transport hubs.
“More emphasis should be placed on planning long-term, medium-density dwellings in the middle-ring suburbs, instead of a large number of unit blocks in the inner-Perth area.
“Special attention should be placed on a strategic plan for re-zoning in key transport corridors and train lines,” he said.
Peleg also cited improving the WA economy, with a particular focus on business investment; taking steps to improve the labour market; and driving population growth as part of a four-pillar approach to minimising risk in the Western Australian property market.
Australian Property Journal