Professionals Victoria Park
880 Albany Highway Victoria Park
08 9361 4666
08 9470 4499Contact us
As they say, we live in interesting times. And what has been most interesting to see happening within the local real estate market lately is the appearance of 2 very distinct sub markets… one suffering due to current market forces, and the other not only holding its own, but continuing to strengthen.
Firstly there is the Apartment Market which has seen sale prices drop substantially due to the current over supply of properties available and with more stock coming online in the foreseeable future. However, on the other hand, there is the Development Block or Subdivisible Property Market, which is performing well and attracting excellent results for local sellers.
But perhaps what is even more interesting to note, is that this current situation offers some excellent opportunities for astute buyers. This can be clearly seen in a couple of my recent sales cases which demonstrate the difference in performance and buying opportunities between these two different arenas.
For example, within the Apartment Market, a brand new development in Forward Street, East Victoria Park was released for sale in May 2015. Within the complex were a selection of different sized units, with the 2 bedroom x 2 bathroom options being launched at a starting price of at $435,000. Unfortunately, with the glut of properties available on the market and the correspondingly strong competition between sellers to capture buyers, prices had to be adjusted significantly.
Ultimately, the last one sold at the greatly reduced price of $385,000, which represents a decline in value of around 11.5%. Within this market there have been many similar examples which support the fact that apartments have reduced in value by at least 10%, and in some cases, by as high as 15%, over the last 12 months.
However, the exciting indicator for astute buyers is that now is an excellent time to purchase an apartment. Not only is there the opportunity to take advantage of the significant savings on the purchase price, but interest rates have just fallen again this week to historically low levels. Therefore the entry level into the market is good and rents on a new apartment are stronger than those on an older home and there is also much less maintenance involved. Added to this there is also a greater ability to claim depreciation on an apartment, so the figures can begin to stack up positively for prospective buyers.
The only recommendation I would make here, is to check the cost of ongoing strata fees and include these in your calculations. This is because these can vary significantly across different developments and can rise markedly after the initial purchase has gone through.
In contrast, the Development Block and Subdivision Market is proving to be an excellent performer with instances where sale prices have been pushed up due to strong interest from buyers where we’ve seen multiple competing offers on a single property.
For example, I have just put a 945sqm triplex development block with house in Bentley under contract this week at $680,000. The initial offers from buyers on this property started at $635,000, progressed up to $650,000 and ultimately the deal was accepted when we received an additional offer at $680,000.
It is interesting to note that a similar property only 6 houses down from this site, with an 817sqm subdivisible block, sold for $610,000 12 months ago. The difference here was that the property was a duplex block and the house was of a higher standard and able to be retained and built behind to achieve the subdivision.
Both of these examples clearly demonstrate that demand within the market for high quality development land is strong. The point here is to be prudent when considering buying any land because a property with future subdivision potential is better than one with no possibility for subdivision at all. Another consideration with a land purchase is its holding cost as rents on an older styled home are lower and potential maintenance issues are more likely to exist. So make sure that you do your figures first before making an offer.
Ultimately my advice for buyers who are looking to take advantage of conditions in these dynamic sub markets is to either:
If you have any questions or wish to discuss your specific property requirements, please feel free to contact me on 0403 588 880. I look forward to hearing from you.