First home buyers in Perth active in urban fringe: HTW residential

Most first home buyers in Perth fall into the sub-$500,000 price bracket, bound within Keystart’s $480,000 price cap and their low deposit home loan income thresholds, according to a recent Herron Todd White (HTW) residential report. 

The report notes from 1 July 2019, these income limits were increased by $15,000 for singles and couples to $105,000 and $130,000 respectively, and increased by $20,000 for families to $155,000 for the metropolitan region.

These increases came “in support of the State Government’s policy to assist more Western Australians into home ownership. By expanding our eligibility criteria, the government estimates that around 11,000 additional households will qualify to apply for Keystart finance.” These increases are temporary and will revert back to the old income limits from 1 January 2020 (Keystart, 2019).

"Mixed in with other factors touched on in previous editions, these increases are contributing to Perth’s current affordability and it is certainly a great time for a first home buyer to get their foot in the door," the valuation firm said. 

The majority of first home buyers are currently purchasing in suburbs on Perth’s urban fringe, including land estates in Baldivis, Wellard, Byford, Caversham, Dayton, Brabham, Aveley, Ellenbrook, Banksia Grove, Alkimos, Eglinton, Yanchep and more.

The median house price for these suburbs ranges from $355,000 (Ellenbrook) to $445,000 (Aveley).

The report suggests a significant proportion of the first home buyer demographic has been choosing to build new dwellings instead of purchasing established property due to the competitive cost of building through house and land packages and the more flexible financing options on offer.

Home builder incentives are rampant at the moment, sweetening the deal on top of the First Home Owner Grant.

In terms of what a typical home looks like for a first home buyer, most properties in these areas are fairly house heavy, meaning the ratio of land value to dwelling value is quite low.

A recent construction valuation on a 360 square metre lot in Baldivis was valued at $338,000 with the estimated proportion of land to improvements at $155,500 and $182,000 respectively – the land only equating to about 85 per cent of the dwelling value.

In comparison, a recent construction valuation on a 719 square metre lot in Leeming came in at $925,000 with the estimated proportion of land to improvements at $525,000 and $400,000 respectively. Here the land is worth 131% of the improvements - a significant difference in ratio compared to Baldivis.

"Of course, that was just one example but house heavy properties are typical for land estates in Perth’s outer metro region," the valuation firm commented.

Most first home buyers in these areas are either couples or young families and the prospect of building a brand new home to their own specification instead of buying something lived in is often at the forefront of their minds.

"This is limiting, as the more you spend on the dwelling, the less budget you can put aside for location and land size.

"Location can be a non-issue for some people who work fly-in-fly-out (FIFO), as the daily commute is not front of mind and for this reason we see a lot of young FIFO workers living in new estates 20 kilometres or more from the CBD," the valuation firm said. 

First home buyers working close to the city with a lifestyle driven towards social events, friends and entertainment look for central locations.

There is an abundance of opportunity in the form of unit developments in suburbs such as Maylands, Mount Lawley, Belmont, Bentley and Queens Park, or medium to high rise apartments in East Perth and Rivervale and often these can be a more affordable option than a cottage block 20 kilometres from the CBD.

This unit at 7/83 Caledonian Avenue in Maylands (pictured below) sold for $275,000 in June 2019.

It comprises one bedroom, one bathroom and one car space with 83 square metres of floor area.

"So how about the upgrader market? We will categorise this as mostly established families who have added or are adding a new family member. These home buyers are often in need of more space and a home closer to work with the amenities that families want to take advantage of," the valuation firm said. 

This includes accessibility to public transport, child care, general practitioners, shopping and entertainment.

Access to major roadways is also helpful for a shorter commute to work and a lower fuel expense.

A major decision factor for parents is where their children will go to primary and high school.

Being within close proximity to good schooling and other amenities is a significant advantage in our time- poor society as saving 20 minutes of driving time each day adds to precious time with the children or extra time to run the household.

Two popular school zones within 13 kilometres of the CBD are Rossmoyne Senior High School and Willetton Senior High School.

These top performing schools placed eighth and 15th respectively in Western Australia for 2018, boasting median ATAR’s of 89.45 and 87.8.

Surrounding these schools is a number of established suburbs including Rossmoyne, Bull Creek, Shelley, Riverton and Willetton.

This area on the left half of the map above is very popular in the upgrader market as it boasts quick access to major roads such as Leech Highway, High Road, Kwinana Freeway and South Street. These roadways accommodate great public transport routes and facilities with Murdoch Station and Bull Creek Station nearby.

There is also plenty of shopping around with neighbourhood shopping at Stockland Bull Creek Shopping Centre, Southlands Boulevarde and Stockland Riverton and regional shopping at Garden City Booragoon and Westfield Carousel, both within a six kilometre radius.

The redeveloping Murdoch Health and Knowledge Precinct is close by, as well as a number of child care and general practitioners.

Within this area are many more schools including All Saints College and eight primary schools. Murdoch University and Curtin University are both within five kilometres.

Beyond the amenities, this area is also known to be very safe so you can see why it is revered as a great place to raise children from birth through to university-age.

These suburbs have median house prices ranging between $650,500 (Riverton) and $1.05 million (Rossmoyne) and would suit a variety of different residents.

This two-storey property at 9 Chancery Crescent, Willetton (pictured below) sold for $778,000 in May 2019.

It was built in 1979 and comprises five bedrooms, two bathrooms and a pool on a 698 square metre allotment.

On the right half of the map above is the Lynwood Senior High School catchment area. 

Lynwood SHS has improved significantly over the past decade, now having some of the highest attendance rates of Western Australia’s public high schools. In 2018, Lynwood SHS received the Department of Education’s Western Australian Secondary School of the Year award and achieved a median ATAR of 80.55.

Suburbs in this area include Parkwood, Lynwood, Ferndale and Langford.

The median house price in these suburbs ranges from $328,344 (Langford) to $436,500 (Parkwood).

Note the significant difference in median house price for the Lynwood SHS zone compared to that of Willetton SHS and Rossmoyne SHS. There are a few reasons for this.

Firstly, it is slightly further away - neither Leach Highway nor Roe Highway traverse any of these suburbs, lengthening travel time to the amenities mentioned above as well as the CBD.

Secondly, the expansive waters of the Canning River end before Parkwood and Ferndale where it turns into wetlands so there are no significant views to help increase the median house price in these suburbs.

Thirdly this area has a lower socio-economic profile. This being said, Parkwood at a median of $436,500 represents a great alternative to neighbouring Willetton ($686,000) in terms of value for money.

This property at 3 Newsam Close, Parkwood (pictured below) sold for $463,000 in March 2019.

It comprises four bedrooms, two bathrooms and a double garage on a 682 square metre allotment.

Churchlands is an affluent suburb located just seven kilometres west of the CBD. Surrounded by Floreat, Woodlands, Doubleview, Wembley Downs and Wembley, this catchment includes Churchlands Senior High School as well as
private Hale School and Newman College.

On top of this there are six primary schools within a two-kilometre radius of Churchlands and the coast is only three kilometres to the west.

The median house price in these suburbs ranges from $900,000 (Woodlands) to $1.35 million in Floreat and Churchlands. Part of the big price tag in these suburbs relates to their proximity to both the CBD and coastline. There are also plenty of top quality cafés in this catchment and no real lack of other amenities either.

This property at 9 Appleberry Street, Churchlands (pictured below) was part of a small land development in 2012.

It sold in June 2019 for $1.415 million.

The circa 2014 build comprises four bedrooms and three bathrooms over two storeys on a 340 square metre allotment.

In terms of prestige home buyers, they are generally looking for properties that are either close to the coast or close to the river, paying large premiums for their chosen suburb’s reputation and views which come with the location.

"We all analyse a large combination of characteristics in the search for our perfect new home no matter what we’re looking for.

"The main attributes that we have covered (proximity to shops, schools, transport, child care, the CBD, coast or river etc) relate directly to any land parcel’s underlying value.

"This includes what can be done with the site, its shape, contour and level etc. The fundamentals will always be king – location, location, location!" the valuation firm added.