BIS Shrapnel provided some rare good news for the residential property sector this week when it forecast a rise in Perth housing prices and demand for new homes.
Along with the cut to official interest rates, the BIS Shrapnel report provided a much-needed boost for the state’s housing market, which has lurched from weak to lifeless in the past year.
The timing of these two pieces of influential news couldn’t have been better for newly minted developer Spatial Property Group, which is close to launching the first lots at its Spires project in North Baldivis.
Established in July 2010 by former Peet development manager Bruce Young, Spatial was founded on a partnership between Mr Young and property investors, developers and builders Vince Carcione and Robert Carcione.
The Carcione brothers have focused on small-lot housing construction through their Belvista Homes building business but they have also built a substantial residential land bank and commercial property portfolio, including the Stargate neighbourhood shopping centres in Perth’s southern suburbs.
Spatial has leveraged the Carcione’s land bank as well as syndicated property investments to build its project portfolio and pipeline.
Mr Young estimated Spatial had more than $550 million in projects under management and was working hard to build its list.
“We don’t have a firm target but we are looking constantly to acquire good new properties,” he said. “We have a number of different strategies; we can buy it on our own balance sheet, we can buy or syndicate to a number of more sophisticated investors or, as is our primary area of focus, we can develop land for an owner.”
Spatial’s geographic focus is on Perth’s rapidly expanding southern corridor and it already has residential projects in Secret Harbour, Southern River and South Baldivis.
The Spires project is a 130-hectare development within walking distance of the Baldivis Regional Shopping Centre. It will support a wide range of building lots as well as ready-built homes, townhouses and villas.
The first lots are expected to sell for less than $180,000 and land sales are expected to run for up to a decade.
Despite last week’s interest rate cut and BIS Shrapnel’s upbeat analysis of the sector, Spatial is realistic about the outlook for Perth’s residential market in the next year.
“I think we are in for a very difficult time for the next six months,” Mr Young told WA Business News.
“But it’s a buyer’s market out there and there are plenty of great projects, developers are eagerly trying to make sales and prices will not come down any more … it’s more a case of when not if.
“I would like to say that would be sooner but I have already been wrong about half a dozen times so I think we will certainly see a few hard yards between now and January-February … I would like to think it will pick up in the new year.”
Like many developers in Western Australia, Spatial has used the market downturn to secure approvals so it’s well positioned to take advantage of any upswing when it does occur.
BIS Shrapnel has forecast lot production in Perth to rise to a peak of almost 12,000 lots in 2012-13 on the strength of population growth and rising demand for housing.
The strong economic outlook for WA and a “rising underlying deficiency of dwellings” underpin these forecasts
The Housing Industry Association has warned WA will be grappling with a shortage of more than 100,000 dwellings by 2020 if building rates continue at 20-year average levels.
