AN OVERVIEW OF RESIDENTIAL PROPERTY MARKET TRENDS FOR ESTABLISHED AND NEW DWELLINGS AND LAND MARKETS IN THE CITY OF WANNEROO
The City of Wanneroo has been one of the fastest growing council areas in Australia over the last decade and there is much more growth in the region to come.
As of mid-2011, the Department of Planning said that there was over 5,500 hectares of undeveloped land zoned for urban development in the City of Wanneroo. This represents over a third of all undeveloped land zoned for urban development in Greater Perth.
The City is therefore expected to continue to accommodate a large portion of Perth’s population growth over the next few decades. Private sector population forecasts suggests that the City’s population is expected to more than double, lifting 120 per cent from 194,000 in 2011 to 354,000 in 2036.
In recent decades, growth was limited to the southern parts of the City, but in recent years a number of greenfield projects have began construction. Large new residential projects are currently being constructed in many of the coastal areas such as Alkimos, Butler, Clarkson, Eglinton, Jindalee, Two Rocks and Yanchep, as well as in areas east of Wanneroo Rd, such as Banksia Grove, Pearsall, Landsdale, Sinagra and Darch. During 2012, more than one in five vacant lots sold in Greater Perth were located in the City of Wanneroo’s boundaries.
Property market conditions
Following the Melbourne Cup rate cut in November 2011, first home buyers were encouraged to purchase dwellings in Perth. Some of these first home buyers bought new dwellings, but most bought existing dwellings. There were many vendors selling homes in the first home buyer price range back in late 2011 and the introduction of more buyers to the market flowed through to increased turnover of established and new dwellings. Improved land sales were recorded by developers across most of Perth’s growth regions, in particular markets that were producing products in the sub-$200,000 bracket (i.e. house and land packages for less than $380,000).
As rents continued to rise and mortgage rates declined, established and land sales improved throughout 2012. In the City of Wanneroo, turnover in the established property sector increased strongly, with the September quarter last year particularly strong with over 1,000 houses changing hands in the three month period. Turnover eased from September quarter highs but picked up again in the March quarter this year. Preliminary figures suggest that 19.3 per cent more residential properties (excluding vacant land) were sold in 2012/13 compared to 11/12.
Sales of detached houses, which make up around nine out of every ten sales, increased 21.5 per cent over 12/13. Early figures suggest that turnover in the June quarter slowed from March levels, but remains 10-15 per cent up on levels 12 months ago. Multi-unit sales, meanwhile, increased 3.8 per cent over 12/13, with sales volumes in 2013 around 30 per cent below mid-2012 highs. The decline in sales of affordable units was felt across all outer Perth regions and is largely attributable to a lack of stock on the market rather than a fall in demand for these products.
The median house price in the City of Wanneroo increased at a faster pace than the Greater Perth median price. In the June quarter, the median house price in the City of Wanneroo was $475,000, up 8 per cent on levels 12 months ago. The median house price in Greater Perth increased 6.1 per cent to $520,000 over the same period.
The lift in the median house price in the City of Wanneroo was driven by more activity in the $400,000 to $500,000 category rather than increased sales of high-end properties in the $700,000 plus range. The June quarter also recorded fewer house sales in the sub-$350,000 range compared to 12 months ago, which is a reflection of low levels of stock on the market in this price range.
On the land development front, after increasing strongly in the first three months of 2013, developers sold 18 per cent fewer lots in the June quarter. Despite the decline, sales volumes in the City were 30 per cent above the five-year average.
Developments in the City are generally larger than projects south of the river. The 15 surveyed developments selling land in the City sold an average of 46 lots over the June quarter, compared to the Perth average of 35 lots.
In the City of Wanneroo, the number of lots on the market declined 29 per cent over the three months to June 30. Similar to many Perth developments, stock is being sold within weeks of being brought to the market. Only 11 of the 15 surveyed developments had stock on the market on June 30, and seven of these developments had 10 or fewer lots available.
Alkimos was the most popular suburb, according to preliminary settlements data. Alkimos and neighbouring Eglinton (the seventh most popular suburb) are undergoing a rapid transformation, with the area expected to accommodate another 20,000 people over the next ten years. Lend Lease’s Alkimos Beach development began selling land in January, joining Peet’s Shorehaven development, LWP Property Group’s Trinity development and Stockland’s Amberton development which have been selling in the Alkimos area for the last few years.
Butler – a popular first home buyer destination – was the second most popular suburb in the City. The average house and land package was estimated at $367,000 in Butler – the sixth most affordable package out of the 70 land hotspots analysed in Greater Perth. Satterley’s Brighton development is the only major land developer in the suburb.
Closer to the Perth CBD, the third most popular suburb for vacant land sales in the City was Landsdale. Projects in Landsdale include Stockland’s Corimbia development and Kingsview Estate.
Increased land sales are flowing to higher construction levels in the City of Wanneroo. In recent months dwelling approvals have strengthened significantly. Over the three months to July 31, there was an average of 292 approvals per month, up 28 per cent on three months earlier. Dwelling approvals lifted 55 per cent in 2012/13 in the City of Wanneroo to 2,944 dwellings.
Much like growth areas in the City of Swan and in southern corridors, prices of new dwellings are increasing. Low levels of lots on the market have seen land prices lift around 7 per cent in the City of Wanneroo and if construction timeframes start to push out further (which is likely given there are approximately 25-30 per cent more houses under construction than this time last year), prices of building a home will also increase. This has the potential to reduce demand at the affordable end of the market – the market that has been the strongest performer over the last two years. This phenomenon will also be exacerbated by easing rental costs and signs that mortgage rates may not decline any further.
Continued upward momentum will, therefore, only be maintained if sales to second and third home buyers and, to a less extent, investors take up the slack.
Contact UDIA for the complete City of Wanneroo Housing and Land Snapshot publication.