Building approvals a telling sign for investors
Despite the soft property market, building approvals for medium density houses in Perth have grown, highlighting the continued shift in buyer’s attitudes towards these dwelling types.
The number of medium density housing building approvals in Western Australia increased 0.4% to 8,001 in the year ending November 2015.
Although the growth was only minor, the number of approvals was still higher following a 35% increase in medium density approvals a year earlier and amid a slower property market in the state.
The growth in the medium density housing segment also came at a time when approvals for stand-alone dwellings dropped by 12.9%.
The new figures were released last month in Bankwest’s Housing Density Report. Bankwest said the resilience of the medium density housing space would be underpinned by Perth’s population growth over the next decade.
“Perth’s population is forecast to grow by 33% to 2.8 million in 2025, bringing an extra 700,000 people into the city,” Bankwest said.
Medium density housing has become more popular in Perth in recent years as residents increasing want to live closer to their places of work, specifically the CBD, as well as the Swan River, coastline and established amenities, such as café and retail strips and train stations.
The shift towards medium density housing highlights the importance of acquiring investment properties in Perth’s inner metropolitan ring.
As the city’s population continues to grow, so too will the demand for properties within this zone.
Properties that have large land components in suburbs with restricted supply capacity are likely to perform the best in the long term.
While the move to medium density housing has increased in Perth in recent years, the city is still lagging behind its capital-city counterparts.
Medium density building approvals comprise just 30% of total building approvals in Perth compared to 57.9% in Melbourne, 64.5% in Brisbane and 69.4% in Sydney, according to the report.