Perth’s Long Road To A Real Estate Boom - Kanebridge News
Share Button

Perth’s Long Road To A Real Estate Boom

After a lacklustre 2020, the Western Australian capital is poised to break out this year.

By Kristen Craze
Mon, Feb 15, 2021 3:10amGrey Clock 5 min

They both boast golden beaches, 28-degree-celsius summer days and glamorous waterfront real estate, but when it comes to comparing property prices there is a great divide between Perth and Sydney.

In addition to the 4000km separating the two Australian cities, there is a cavernous $700,000  gulf in average house prices. But that looks set to change.

Despite Perth being 2020’s second worst-performing Australian capital city in terms of price growth, Louis Christopher, managing director of SQM Research, a residential property data firm, said recent numbers show all the hallmarks of a boom.

“Our forecast is that dwelling prices for Perth will rise by 8% to 12% this year,” he said. “We have another scenario where everything goes right with the vaccine, and everything gets back to some kind of normal in the world, then prices will rise by 10% to 15%.”

“If we are correct about that forecast, it will be the first meaningful rise Perth housing has had since 2007, or briefly between 2013 and 2014,” he added. “It’s taken a long time for the market to experience strong rises. Indeed, the median house price for Perth is actually still lower than it was in 2008, but it’s fair to say it’s offering really good value relative to other cities and relative to its recent history as well,” he said.

According to SQM Research figures, the current median asking price for detached houses in Perth is $672,000, while apartments are $385,000. Meanwhile, Sydney’s median sits at $1.38 million (for houses) and $670,000 (for apartments).

Full Speed Ahead

Data compiled by the Real Estate Institute of Western Australia showed that Perth’s home value index lifted 1.6% in January, and was up 3.8% compared with three months ago, currently making it the fastest-growing major residential market in Australia.

Damian Collins, REIWA president and local broker with Momentum Wealth Residential Property, said the city’s property prices looked set to soar.

“The improvement experienced in the latter half of 2020 has continued into 2021, which is pleasing to see. With the pandemic continuing to impact travel and our local economy bouncing back after a challenging year, more and more West Australians are recognizing that now is the time to buy,” he said.

“Properties continue to sell at a faster rate than they did last year, with the median days to sell sitting at just 21 days, down from 43 days in January 2020. There is little doubt now that the Perth market has swung into the seller’s favour and buyers are needing to act a lot faster to secure a property,” he said.

Confidence Has Returned

Perth’s luxury real estate market is also currently experiencing a renaissance, according to realtor Mark Anderson of Hub Residential, a brokerage based in the West Australian capital city.

“We had a drop in confidence around May and June of 2020 at the height of Covid uncertainty in Australia, but that’s changed,” he said.

“In the $5 million to $30 million price brackets, I’d have to say that buyers at that level have a pretty good handle on where the economy is going. They’re looking at it from the point of view that this is a good time to trade, a good time to buy,” he added, attributing the positive sentiment to Australia’s record-low mortgage interest rates (the official cash rate is sitting at 0.10%) and Western Australia’s comparatively low coronavirus infection rate. (The state has recorded 907 cases and nine deaths since the state’s first reported case on Feb. 21, 2020.)

Mr Anderson said waterfront suburbs would be the ones to watch as home buyers and investors, including a wave of international ex-pats, seek out lifestyle properties in the wake of the pandemic.

“Towards the end of last year, for example, Cottesloe turbocharged itself in about 10 weeks and in some cases, the increases were anywhere between 15% and 25% year on year,” Mr Anderson said of the beachfront suburb where the median house price is now $1.95 million.

Located approximately seven miles from the city centre, Cottesloe is known for its more than half a mile stretch of white sand and waterfront restaurants.

“Some of these buyers see Cottesloe as a blue-chip investment, but ultimately I think people are asking themselves ‘Where do I want to end up?’ and the answer is the beach. I guess it’s a great example of FOMO,” he added.

Comparing the Markets

“Perth is just one of those really unique places in the world. I ask people when they’re buying a house here, ‘Why did you come?’ and they often say, ‘We love how it’s so spacious, it’s like a big country town!’” Mr Anderson said.

Perth’s population according to the 2016 Census was just under 2 million, while Sydney’s was approaching 5 million.

He said when international, and interstate, buyers stack Perth up against its more famous cousin, they often see more bang for their buck in Sydney.

“Our prices are really inexpensive given the fact that we’re so close to the beach, or the river. Our beaches are as good as Sydney, but the cost of living isn’t as high—and it’s relatively safe. We don’t even have as much rain, or the damaging storms that Sydney has,” Mr Anderson said.

On paper, the comparison also works in Perth’s favour. For Sydney’s median house price of $1.38 million, buyers in blue chip waterfront suburbs would get a modest attached two-bedroom home. In Perth, the same money could secure a spacious four- to five-bedroom family property on a grand block close to the beach or riverfront.

Often referred to as the most isolated city in the world, Perth is more than 2000km from the nearest city. Its property market is also unique in that global commodity prices play their part due to the significant role mining has in the state of Western Australia.

“What makes us think this time around we’re definitely going to see a pick up in Perth is what’s happening in the local rental market. Rents there absolutely plummeted in 2019 and 2020, but right now the vacancy rate at the end of December was just 0.9%. At its worst, when Perth rentals were majorly oversupplied back in 2016 and 2017, the rate was 5.5%,” Mr Christopher said.

As a result, rents are surging. SQM Research analysis shows house rents in Perth rose 12.7% in a year to $499 a week while apartments increased by 10.4% to $375 a week.

Mr Collins added that Perth’s residential vacancy rate has hit the lowest level recorded by the REIWA in 40 years.

“With the rental stock levels remaining low and expected to do so in the coming months, combined with low interest rates and expected gross yield growth, we will expect investor numbers to increase in the latter end of the year, particularly when the moratorium ends in March,” he explained, referring to the conclusion of a state-wide freeze prohibiting residential rental increases.

A City on the Rebound

Mr Christopher said that the Perth rental market has generally been the lead indicator for the residential sale market.

“You don’t always get that with other cities. In Sydney and Melbourne, you can have a weak rental market, but the [sales] market can still stay strong, and vice versa,” he said.

Mr Christopher explained that by 2019 there was no new construction in Perth, however employment levels began to increase due to a pick-up in local mining projects. Although projects paused briefly in 2020 due to Covid, it is now all systems go.

“Perth has been creating jobs, and still is creating jobs, but there’s been no new accommodation for the additional people coming to Perth,” he said.

Conversely, Australia’s other capitals have experienced a rise in vacancies and plummeting asking rents due to stalled immigration and international student numbers since the onset of the pandemic.

This, according to Mr Christopher, makes Perth more or less “coronavirus-proof” in the future.

“Perth traditionally doesn’t get a large share of international migration. Everyone tends to go to Sydney and Melbourne, so when Australia’s borders closed, Perth wasn’t hit as hard as the larger cities were,” he said.



MOST POPULAR

What a quarter-million dollars gets you in the western capital.

Alexandre de Betak and his wife are focusing on their most personal project yet.

Related Stories
Property
I.M. Pei’s Son Speaks of His Father’s Legacy of Creating ‘Places for People’ Ahead of a Retrospective in Hong Kong
By ABBY SCHULTZ 12/06/2024
Property
THE EAST COAST CAPITAL SETTING THE PACE IN THE AUSTRALIAN REAL ESTATE MARKET
By Robyn Willis 06/06/2024
Property
Penthouse by Dubai’s Iconic Burj Khalifa Sells for AED 139 Million
By LIZ LUCKING 05/06/2024
By ABBY SCHULTZ
Wed, Jun 12, 2024 5 min

I.M. Pei was the confident visionary behind such transformative structures as the Bank of China Tower in Hong Kong and the Louvre Pyramid in Paris, but he was also humble, and for years resisted a retrospective of his work.

Pei, a Chinese-American architect who died in 2019 at 102 , would always protest any suggestion of a major exhibition, saying, “why me,” noting, too, that he was still actively at work, recalls his youngest son, Li Chung “Sandi” Pei. A decade ago, when Pei was in his mid-to-late 90s, he relented, finally telling Aric Chen, a curator at the M+ museum in Hong Kong, “all right, if you want to do it, go ahead,” Sandi says.

A sweeping retrospective, “I.M. Pei: Life Is Architecture,” will open June 29 at M+ in the city’s West Kowloon Cultural District. The exhibition of more than 300 objects, including drawings, architectural models, photographs, films, and other archival documents, will feature Pei’s influential structures, but in dialogue with his “social, cultural, and biographical trajectories, showing architecture and life to be inseparable,” the museum said in a news release.

As a Chinese citizen who moved to the U.S. in 1935 to learn architecture, Pei—whose full first name was Ieoh Ming—brought a unique cultural perspective to his work.

“His life is what’s really interesting and separates him from many other architects,” Sandi says. “He brought with him so many sensibilities, cultural connections to China, and yet he was a man of America, the West.”

Facade of the Bank of China Tower in Hong Kong in a photograph commissioned by M+ in 2021.
© South Ho Siu Nam

Pei’s architectural work was significant particularly because of its emphasis on cultural institutions—from the East Building of the National Gallery of Art in Washington, D.C., to the Museum of Islamic Art in Doha, Qatar—“buildings that have a major impact in their communities,” Sandi says. But he also did several urban redevelopment projects, including Kips Bay Towers in Manhattan and Society Hill in Philadelphia.

“These are all places for people,” Sandi says. “He believed in the importance of architecture as a way to bring and celebrate life. Whether it was a housing development or museum or a tall building or whatever—he really felt a responsibility to try to bring something to wherever he was working that would uplift people.”

A critical juncture in Pei’s career was 1948, when he was recruited from the Harvard Graduate School of Design (where he received a master’s degree in architecture) by New York real estate developer William Zeckendorf.

With Zeckendorf, Pei traveled across the country, meeting politicians and other “movers and shakers” from Denver and Los Angeles, to Philadelphia, Washington D.C., Boston, and New York. “He became very adept at working in that environment, where you had to know how to persuade people,” Sandi says.

During the seven-year period Pei worked with Zeckendorf, the developer fostered the growth of his architecture practice, supporting an office that included urban, industrial, graphic, and interior designers, in addition to architects and other specialists, Sandi says.

When Pei started his own practice in 1955, “he had this wealth of a firm that could do anything almost anywhere,” Sandi says. “It was an incredible springboard for what became his own practice, which had no parallel in the profession.”

According to Sandi, Chinese culture, traditions, and art were inherent to his father’s life as he grew up, and “he brought that sensibility when he came into America and it always influenced his work.” This largely showed up in the way he thought of architecture as a “play of solids and voids,” or buildings and landscape.

“He always felt that they worked together in tandem—you can’t separate one from the other—and both of them are influenced by the play of light,” Sandi says.

View of the National Center for Atmospheric Research, on the mesa, in a photograph commissioned by M+ in 2021.
© Naho Kubota

Pei also often said that “architecture follows art,” and was particularly influenced by cubism, an artistic movement exploring time and space that was practiced in the early 20th century by Pablo Picasso, Georges Braque, and the sculptor Jacques Lipchitz, among others. This influence is apparent in the laboratory at the National Center for Atmospheric Research in Boulder, Colo., and at the Everson Museum of Art in Syracuse, N.Y. “Those two buildings, if you look at them, have a play of solid and void, which are very cubistic,” Sandi says.

Yet Sandi argues that his father didn’t have a specific architectural style. Geometry may have been a consistent feature to his work, but his projects always were designed in response to their intended site. The resulting structure emerged as almost inevitable, he says. “It just was the right solution.”

Pei also intended his buildings “not only to be themselves a magnet for life,” but also to influence the area where they existed. “He never felt that a building stood alone,” Sandi says. “Urban design, urban planning, was a very important part of his approach to architecture, always.”

After he closed his own firm to supposedly “retire” in the early 1990s, Pei worked alongside Sandi and his older brother, Chien Chung (Didi) Pei, who died late last year, at PEI Architects, formerly Pei Partnership Architects. Pei would work on his own projects, with their assistance, and would guide his sons, too. The firm had substantial involvement in the Museum of Islamic Art, among other initiatives, for instance, Sandi says.

Working with his father was fun, he says. In starting a project, Pei was often deliberately vague about his intentions. The structure would coalesce “through a process of dialogue and sketches and sometimes just having lunch over a bottle of wine,” Sandi says. “He was able to draw from each of us who was working on the project our best efforts to help to guide [it] to some kind of form.”

The M+ retrospective, which will run through Jan. 5, is divided into six areas of focus, from Pei’s upbringing and education through to his work in real estate and urban redevelopment, art and civic projects, to how he reinterpreted history through design.

Sandi, who will participate in a free public discussion moderated by exhibition co-curator Shirley Surya on the day it opens, is interested “in the opportunity to look at my father anew and to see his work in a different light now that it’s over, his last buildings are complete. You can take a full assessment of his career.”

And, he says, “I’m excited for other people to become familiar with his life.”