Q4 From The Valuers Desk

CBRE provide Valuation Services to a range of clients from lenders, private clients, lawyers, government, and institutional investors with residential valuers covering metro Perth, Mandurah, the south west, east to Toodyay, York, Northam and north through to Jurien bay.

As well as mortgage security valuations we also conduct valuations for a range of uses from deceased estates, stamp duty, property transfers through to advisory, consultancy for property owners and sellers.

In this edition to conclude 2023 we look at :

Riverside South Sales
Near City Subiaco and Shenton Park
Year Gone By
CBRE View on National Residential

INNER SOUTH RIVERSIDE

		Let us introduce Matt Stephen, and the near south residential markets. Matt covers some of the most difficult inner south coastal markets of the Perth metropolitan area including Fremantly down to Coogee. This market has a variety of product from heritage buildings, new Oceanside development and luxury housing along the swan river.

Similar to the rest of the Perth market, the inner south residential market features very low levels of available stock across nearly all market segments resulting in price growth. Riverside South, detached homes in good condition sub $1.5m are the most in demand product in the area and showed the strongest price gains throughout 2023. Rising interest rates have impacted the market for properties above $2m, with affordability and borrowing constraints reducing the level of demand and subsequently slowing price growth at the upper end, albeit with some well presented, modern or fully renovated dwellings still achieving strong prices. The slowest property type within the inner south would be vacant land, with prices generally having stalled over the prior 12-24 months due to construction time frame delays and cost escalations hampering people’s appetite to take on new builds.

Let us look at some relevant sales of 2023

51A Macleod Road, Applecross WA 6153

Sold Sept-2023 for $1,315,000 and comprises a regular shape, vacant lot of 636 sq.m. Previously sold for $1,450,000 April-2022.

21B Lilian Avenue, Applecross WA 6153

Sold June-2023 for $835,000 and comprises an irregular, battleaxe shape lot of 546 sq.m (includes driveway portion). Previously sold for $850,000 Oct-2021.

1 Nelson Street, South Fremantle WA 6162

Sold Sept-2023 for $2,900,000 in an off market transaction and comprises a 1950’s built, fully renovated 4x2 with a detached, modern 1x1 studio situated on a 491 sq.m lot. Previously sold for $1,380,000 March-2019, with an addition of a swimming pool, alfresco and studio being the only major changes in between the sale dates.

127 Point Walter Road, Bicton WA 6157

Sold June-2023 for $5,750,000 and comprises a 2004, three storey, 5x4 situated in an elevated position backing onto Blackwall Reach Reserve with panoramic river views. Previously sold for $4,325,000 March-2018.

From Riverside South to the popular near city location of SUBIACO and SHENTON PARK

Subiaco, recently voted the ‘most livable suburb’ in Australia in the 2023 Australian Liveability Census continues to grow and attract a diverse population given the wide range of property types and price brackets. The older residential “heritage” areas continue to show strong growth and very short selling periods. The original homes within the Subi Centro built in the late 1990s are beginning to show their age but remain in good demand for their location with those that have been recently renovated often achieving a premium.

Noticeable Sales include:

2302/4 Seddon Street, Subiaco. Sold $3,500,000 8 August 2023
3 bedroom 3 bathroom apartment on the 23^rd floor with a living area of 251sqm ($13,944/sqm) and 3 basement carbays.

2303/4 Seddon Street, Subiaco. Sold $4,900,000 29 May 2023
3 bedroom 3 bathroom apartment on the 23^rd floor with a living area of 271sqm ($18,081/sqm) and 4 basement car bays.

198 Park Street, Subiaco. Sold $3,000,000 6 September 2023
1987 built, recently renovated, and extended contemporary appealing residence comprising 3 bedrooms, 3 bathrooms on a 390sqm lot within a short walk to Rokeby Road.

58 Rossello Lane, Subiaco Sold for $3,100,000 18 July 2023
2004 built, three level residence rearing onto Subiaco Commons parkland comprising 3 bedrooms and 3 bathrooms on a 196sqm lot.

Shenton Park
Sits over two local councils, City of Subiaco and City of Nedlands. A strong draw to the locality from young families and couples is the relatively affordable entry price level due to the smaller lot areas that typically range from 330sqm to 500sqm. The suburb has a small shopping village (IGA supermarket), primary school and Shenton College public high school. It is well serviced by public bus transport and local train station with easy access to the city. Similar to Subiaco, properties do generally sell within the first few weeks of marketing. Recent development has extended to over the railway line with new residential small lot subdivisions and a high density mixed use development.

Noticeable Sales include:

28 Hopetoun Terrace, Shenton Park Sold for $3,100,000 on 31 July 2023
A modern high quality single story architect designed residence comprising 4 bedrooms 3 bathrooms on a 546sqm lot.

9 Commercial Road, Shenton Park Sold for $2,500,000 on 1 July 2023
A renovated and extended 1911 weatherboard and iron cottage comprising a 4 bedroom and 2 bathroom accommodation on a 498sqm lot.

11 Rankin Road, Shenton Park Sold for $3,250,000 on 28 July 2023
A renovated single story older style dwelling, c1945, rendered brick, iron construction, 4 bedrooms, 2 bathrooms, plus studio with extensive covered outdoor areas and is within close walking distance to Lake Jualbup

A QUICK SNAPSHOT OF THE YEAR GONE

2023 Perth Residential property has probably gone through some of the most rapid changing years in the recent history of our residential markets, from Covid challenges and changes, shifting interest rates, low stock levels across the country, now above average migration numbers let us look at some of the outcomes for our residential market.

Key fundamentals remain for our residential markets, as attention remains on our labour market and housing sector to determine the Reserve Bank of Australia's (RBA) stance on future rate hikes.

We look at 3 key questions:

Any significant market matters, changes, or influences effecting the market:
Construction valuations still remain strong, while eastern state BUYERS/investors influencing the market along with a significant lack of stock for rental and for sale, will continue to influence the market.
How the interest rate changes have impacted on the market
There has ongoing attention around interest rates and effect on the property market
Most of the impact on the 3 largest cities was immediate. Sydney/Melbourne and Brisbane reacted immediately to the interest rate rises however it’s probably no surprise as each of these markets experienced significant growth throughout the previous 2 years and were coming off a very high median house price. Interestingly though even they have recovered toward the back end of the rises.
Perth shows a very different story – Very minimal impact throughout each increase with no indication this will change. Not until the 4^th rate rise did we see any negative impact on values, and that was short lived.
What part of the market is shifting for the better, or areas of concern;
Most of the market is traveling well and we don’t anticipate much change in the near future.
Land sales, although slow, we expect will come back depending on available stock.
There has been a general reluctance to build new housing on the back of time blow outs and escalating costs. But we anticipate this to change throughout 2024.

CBRE VIEW ON NATIONAL RESIDENTIAL

Australia’s residential values have risen for 7 consecutive months with capital city values jumped by around 7% since March.
Low stock levels across the country, resurgent migration have more than compensated for the headwinds from higher interest rates.
Under supply in the rental market remains a key issue, the build to rent product isn’t as popular (yet) here in Perth as other larger cities.
Perth median rents have outperformed every other capital city with over 60% increases since the pandemic induced low points for houses
Rental affordability is a frequent question. CBRE Research estimate that apartment rents will grow by 26% over 2023-28, with a number of precincts at +30% growth. On price growth (capital value), our estimates are 2024 +5% and 2025 +14%. Brisbane and Melbourne are expected to bookend this, with the former posting 33% growth between start of 2023 to end 2025.

A look at the National Overview from CBRE Research:

Australian Gross Domestic Product (GDP) rose 0.2% in seasonally adjusted chain volume terms in the September quarter and by 2.1% in annual terms.
Ongoing high levels of migration to Australia saw GDP per capita fall 0.5%, while Households only saved 1.1% if their income in the September quarter, which is the lowest proportion of saving since December quarter 2007.
In their December 2023 interest rate decision, the Reserve Bank of Australia maintained the cash rate at 4.25% after a 25bps rise at their November meeting.
Australia's residential markets have shown resilience in 2023. The thirteen interest rate rises, although a supply/demand balance has seen solid growth resume through 2023.

		REIWA SNAPSHOT Week ending 14 January 2024 Stock on market (Sales): 3,792 Sold this week: 623 Medium house price: $590,000 Selling days: 8 Stock on market (Rental): 1,955 Leased this week: 618