Perth Developers Not Building Enough Units
Perth developers are not building enough units, new ABS figures show.
Perth developers are not producing anywhere near the number of units needed, new data shows, presenting a huge opportunity for investors.
Compared to other cities – including Adelaide and Brisbane – unit developments in Perth a not being approved anywhere near the rate needed to keep up with demand.
Figures released by the Australian Bureau of Statistics for June shows unit approvals up significantly across Australia, while Perth developers are still building far less units than needed to keep up with population growth (Population 3 million by 2020) and economic demand.
While the figures show June saw a cooling off of building activity across Australia, new building approvals were still at highs not seen since 1994.
RP Data Research Analyst Cameron Kusher wrote today that unit approvals have surged by 22% year-on-year, indicating changing lifestyle preferences for Australians.
The surge in demand for units “reflects changing lifestyle patterns and greater acceptance of higher density living.” Kusher explained, in a blog post published July 31.
However, the number of new units set for approval in Perth is far fewer than other cities, including Adelaide. For example, total unit approvals in Perth accounted for 23.8% of national figures, while Adelaide accounted for 32.3% of unit development approvals.
Quite simply, there are not enough Perth developers undertaking unit development projects to keep up with forecast population and demand trends.
The figures below show Perth is the last major Australian city for unit approvals, despite Western Australia’s economic strength and growth. This has been the case since early 2008, when Perth was equal to Melbourne and Brisbane and ahead of Adelaide.
Yet, as you can see below, total dwelling approvals ( new units + detached new houses) in Perth are far ahead of Adelaide and Brisbane, only behind the much bigger cities of Melbourne and Sydney.
Clearly there is a deficit in unit development in Perth, with developers and government policy focused on clearing land for bigger detached housing, rather than unit development needed in Perth to keep up with population demand, an ageing population and infrastructure needs.
There is clearly a shortage of units in the city, with the trend toward more unit approvals in other parts of Australia, Perth is yet to see this trend. However, with changing lifestyle preferences, infrastructure demands and changing demographics, units are clearly going to be in far greater demand in the years ahead.
Here lies a big opportunity for current and future Perth developers.
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