Projects taller, apartments smaller
Perth's apartment projects are getting taller but apartments are getting smaller as developers refine configurations to meet buyer preferences and density targets.
A new report by Master Builders and Y Research found that Perth had 121 apartment projects either under construction, with development approved or actively progressing through the development process in 19 suburbs within 5km of the CBD.
These projects, when complete, could add 10,685 apartments to the inner-city market by 2020, a 56 per cent increase in the supply, according to the Perth High Density Apartment Report.
Master Builders director of housing Geoff Cooper said the report showed a 34 per cent increase in supply of mostly occupied inner-city apartments since 2010.
"It's clear that we are seeing a value shift," Mr Cooper said.
"Apartments now account for over 20 per cent of new dwelling approvals in WA. But this remains one of the lowest proportions in Australian cities, with the rate in the mature Sydney and Melbourne markets well above 50 per cent."
Y Research principal Damian Stone said Perth's apartment market was due three consecutive years of record growth as the shift to apartment living occurs at a faster rate than expected.
"This year, we will see the largest single-year increase of apartment supply on record - 1613 apartments will be completed in Perth's inner suburbs. This is 52.2 per cent higher than the previous record of 1060 apartments in 2010," Mr Stone said.
"In the past six months, 35 projects across metropolitan Perth have reached pre-sale goals and started construction."
In the wider metropolitan market, Perth will get 2855 new apartments this year and in 2016, when the market peaks, 3800 new apartments will be built.
The development focus has also switched to taller buildings and slightly smaller apartments.
Buildings with more than 100 apartments represent 24.6 per cent of future projects but account for 60.7 per cent of future supply.
"Buildings are also yielding more apartments by getting taller, above nine storeys, and offering smaller average room sizes," Mr Stone said.
"Smaller apartments, economies of scale offered by larger projects, more competition, labour availability and a slight reduction in material costs in the post-resources market are also resulting in cheaper prices.
"Average prices for one-bedroom apartments and two- bedrooms and two-bathroom apartments are more than 10 per cent cheaper than projects under construction."
Developers are also building fewer two-bedroom, one-bathroom apartments and more with two bedrooms and two bathrooms.
Around 59 per cent of apartments under construction are two-bedroom, and of those 85 per cent are two-bedroom, two bathroom.
The number of three-bedroom apartments is waning, down from 8 per cent to 5 per cent of new supply while one-bedroom apartments represent about 38 per cent of the new supply.
Concern about oversupply that has dogged the market, especially in the rental market, has not shown up in numbers so far.
According to Y Research, the 2000 apartments built last year have a vacancy rate of 5.1 per cent compared with the overall inner-Perth apartment market average vacancy of 3.8 per cent. "From a development perspective, the market has inbuilt safeguards that should limit any potential oversupply," Mr Stone said.
In the existing market, there are 620 apartments, or 3.2 per cent of overall stock, for sale, with two-bedroom, one-bathroom apartments accounting for 16 per cent, two-bedroom, two-bathrooms 32 per cent, three-bedrooms 24 per cent and penthouses 4.5 per cent.
APARTMENT FACTS *
· 531 buildings with 19,064 apartments across 19 suburbs within 5km of the Perth CBD.
·In the past 6 months, development was approved for 78 metro apartments each day and construction started on 18 apartments each day.
·1x1 average price, $435,000; 2x1, $575,000; 2x2, $649,000; 3 bedrooms, $875,000.
Source: Y Research
