SHORTAGE OF APARTMENTS PREDICTED FOR CENTRAL CITY AREA

The Central area of Perth could experience a shortage of apartments over the next two years according to Corrado Cusma, Managing Director of OrangeTee Real Estate.

Mr Cusma said that a tightening in lending by the major banks has resulted in a dramatic fall in building approvals of higher density homes for the central Perth area.

“The latest ABS building approvals figures show during the 11 months ending May 2009, building approvals for higher density homes such as apartments fell to $167 million in the central Perth area compared to $557 million for the same period during the previous year.

“This fall in building approvals is occurring during a time of increasing demand for central city living due to Western Australia’s rising population rate.

“ABS figures show that Western Australia’s population grew by the fastest in Australia during 2008 by 3.1% or some 66,000 persons.

"A key part of this population growth was the contribution by overseas migrants with more than 40,000 overseas migrants settling in Western Australia during 2008.

"The inner city area of Perth is set to benefit over the longer term from this surge in overseas migration because the area traditionally attracts a high proportion of migrants.

"For example, the 2006 Census showed that the 6000 postcode of Perth had a total population of over 6,000 persons of which nearly 40% were born overseas. This high proportion of people born overseas in the inner city area of Perth compares to rate of around 31% for the entire Perth metropolitan area.

 “In addition, lower birth rates combined with a growing number of people living alone will also increase the demand for inner city living over the longer term.

“OrangeTee Real Estate, which currently sells a large number of properties in the inner city area of Perth, is finding that the number of properties advertised for sale has fallen significantly over the past year.

“Falling listings is generally an early indication of rising property prices. With fewer apartments being constructed in the inner city area of Perth during a time when demand is rising for inner city living, then prices can expect to rise in the near future.

“When the economy begins to recover, the demand for building trades will increase and this inturn will put pressure on building costs which will make new apartments more expensive.

“Anyone, who is considering buying an inner city apartment should act swiftly while market conditions still favour buyers,” he said.