High-density developments driven by interstate investors may undermine the stability of the Perth market, the latest report from Herron Todd White (HTW) has warned.
“The Perth residential market is once again suffering from overactivity by investors and developers, especially with regard to multiple dwelling developments,” the report stated.
According to the analysis, strong investor activity is encouraging developers to focus on smaller lot sizes and multi-unit developments over traditional house and land packages.
“Of most concern are multiple-unit developments away from transport orientated communities (that is, 800 metres outside of a radius from a train station),” the report stated.
“The areas in and around Kewdale, Cloverdale and Belmont have been witness to an alarming increase in the development of one- and two-bedroom apartments on traditional sized lots, with developers taking advantage of the dual, and in some instances triple, split residential codings of these sites.”
As an example, HTW reports 750 square metre sites that may have once accommodated one house or a handful of townhouses are being used “to the maximum R100 coding with up to eight dwellings being developed on the lot”.
HTW warns these properties are unlikely to appeal to local buyers.
“In reality, the product cuts out first home buyers and only suits investors,” the report said.
“The investors aren’t local either. A majority are eastern states based.”
According to HTW, this trend is concerning because investors are less likely to buy in areas with good fundamentals like proximity to amenities, the CBD and public transport, the report warned.
“It would appear the signs are there to indicate something dark is on the horizon. So, if I were a first-time homebuyer, I would be holding off my decision for a little while longer,” the report stated.
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