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Lot supply tight in south-eastern zone 11/07/2015

Like some other areas in Perth, the south-eastern corridor has struggled with supply over the past couple of years but it has escaped the more severe shortages that have affected the north-eastern corridor.

Like some other areas in Perth, the south-eastern corridor has struggled with supply over the past couple of years but it has escaped the more severe shortages that have affected the north-eastern corridor. 


Supply is currently 111 per cent of demand in the south-eastern corridor, which covers the Cities of Gosnell and Armadale as well as the Shire of Serpentine Jarrahdale. 


This is the tightest supply ratio in 12 months and means that there is only just over one lot per buyer forecast for the region over the next six months.

 
The shortage comes from a significant uplift in sales in the corridor, the bulk of which occurred in the City of Armadale, which was up a massive 54.5 per cent on last quarter and represented 17.5 per cent of sales in the whole of Greater Perth (including Peel). 


As a consequence, supply in the City of Armadale has now dropped into negative territory with lot supply forecast to service only nine out of 10 purchasers. 


Lot sizes increased marginally in the corridor from the average of 395sqm recorded last quarter to an average of 401sqm this quarter, however there was significant diversity in the product range.


The average lot size in the City of Armadale was 373sqm, whereas the average in Serpentine Jarrahdale was 494sqm.  


There was also some variation in average pricing; lots in the City of Armadale averaged $254,428 while the average price of lots in Serpentine Jarrahdale was $225,091.  


Looking forward, it is likely that the south-eastern corridor will experience a contraction in sales during the June quarter based on the forecast supply available for the market.


While the rate of construction is slowing, if demand remains strong developers are likely to bring on more supply as long as they are not delayed by factors beyond their control.


Interestingly, the UDIA survey showed that there were 391 developer lot sales in the City of Armadale for the March quarter, nearly triple that of Shire of Serpentine Jarrahdale, yet Serpentine Jarrahdale had 27 per cent more lots proceed to final WAPC approval in the quarter.  


The number of lots on the market as of March 30 in the corridor was 39 percent higher than the previous quarter as construction flowed through to available stock.  This means that sales early in the June quarter may not be affected by the supply issues that are likely to come into play later in the quarter.

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