This article is from the Australian Property Journal archive
DEMAND for premium townhouses in Perth is significantly eclipsing the current limited supply in the upper price brackets.
According to Perth-based property fund manager Westbridge Funds Management and data from PropTrack, in Perth premium townhouses accounted for 23% of townhouse buyer enquiries over the September quarter, despite making up just 7.5% of new supply.
While the majority of new townhouse supply in the Western Australian capital was priced between $500,000 and $750,000, 29.2% of townhouse buyer enquiries were in the $1 million to $1.5 million range, which made up only 11.3% of supply.
“Right now, we are seeing a trifecta of factors come together – high demand, low supply and rising property values, that give developers and investors an exciting opportunity to harness attractive returns in the premium townhouse market,” said Damian Collins, chairman of Westbridge Funds Management.
Collins noted that there is increasingly new opportunities for developers in the townhouse space, with rezonings –like that of the City of Nedlands in 2019–and the growing value of Perth’s western suburbs.
According to REIWA, the median house price in the western suburbs was up 14.79% in the 12 months to June, up 2.51% on growth seen in Greater Perth in the same period.
With the western suburbs also seeing growth of 34.47% and 50.54% over the previous five-year and 10-year period respectively.
“This type of development hasn’t been common in Perth’s Western suburbs until recent years. Yet at the same time, we are seeing pent-up demand for premium townhouse product, particularly from the downsizer demographic, who are not impacted by rising mortgage interest rates,” added Collins.
Westbridge Funds Management itself has backed Perth’s premium townhouse market with several developments in the western suburbs, such as the newly completed townhouse project at Adelma Road in Dalkeith, and the recently closed Cottesloe Fund and multi-asset Townhouse Fund.
“The strong sales outcomes and the continued growth we’ve seen in suburbs such as Dalkeith has helped to absorb and, in some cases, even outpace rising construction costs, which has underpinned the strong and continued potential of developments in this space,” concluded Collins.
