Perth’s apartment market continues to grow apace, recording more than $1 billion in sales in the past financial year, compared to $851 million in 2023.
But it is facing a cliff, according to Urbis’s Apartment Essentials data, which indicates almost three quarters of stock is already sold, and more will need to come online to maintain the momentum in the City of Light.
Urbis data recorded 299 sales from a sample of 64 surveys in the second quarter of 2024, the highest level of recorded sales since the first quarter of 2022.
But there is good news on the horizon with apartment completions in Perth at their highest levels in seven years, with 811 apartments already delivered in 2024, and a further 1768 under construction and due for completion.
Urbis director David Cresp said about 2600 apartments were expected to be completed by the end of the year.
“This is a real boost to housing supply, close to what we have seen completed in total for the last three years combined,” Cresp said.
“Among these completions are some of Perth’s largest apartment buildings, including Perth Hub, Civic Heart, and The Grove.
“These projects are a testament to our dedication to shaping the future of our cities and communities.”
But, Cresp warns, the 2024 boost in completions will be short-lived with the number of completions expected to drop again to 621 in 2025.
“In 2026 we currently estimate another boost of 1681 completions, however with half of this supply still in pre-sales this will be market dependent,” he said.
In 2023 about 1073 new apartments launched to the market, less than a quarter of what was launched in the peak of the market in 2015.
“There has been an uptick in quality over quantity when it comes to the apartment market,” Cresp said.
“Developers have been trying to get the most bang for their buck targeting the high to premium apartment market over the past five years, a shift away from the perception of apartments as an entry-level product.
“However, the dynamic is shifting a bit in 2024, with close to 70 per cent of new launches targeted mid-market or lower. This compares to 40 per cent in 2023, and only 28 per cent in 2022.”
Construction costs continue to challenge feasibilities at the lower end of the market, despite strong appetite for entry-level projects.
Finbar’s Bel-Air on the Great Eastern Highway was the top-selling project in the last quarter, with 99 sales made in the quarter it was launched at a sale price of close to $600,000 on average.
Cresp said this was “about as low as anyone is able to produce apartments for now in the Perth market”.
The city’s build-to-rent market is yet to crystallise with 173 apartments built, 109 under construction and a further 2105 with development approval that are yet to come to market.
“Unlocking the build-to-rent market in Perth would help take pressure off the rental market,” he said.
“Melbourne has seen close to 3000 build-to-rent apartments built, Brisbane only 860 but with a further 1500 under construction.
“Perth has definitely been the slowest market to adopt the build-to-rent model due to it often being challenging to get international backers of build-to-rent projects to focus on the Perth market as the east coast tends to be their initial priority.”
