INVESTORS GO BACK TO GROWTH
March 2005

An investor trend towards properties offering growth over cash flow that emerged in 2004 looks set to continue this year, predicts Property Wizards' Director Trevor Dunkley.

The Subiaco buyer's agent said while in the past there had been strong demand for Perth properties delivering positive cash flow, there'd been a shift in attitude in recent times.

"We really noticed last year, especially in the final quarter, that investors had decided their money was better spent buying property that would give them good long term growth instead of being intent on finding positive cash flow properties," Mr Dunkley said.

He explained that following the recent property boom, positive cash flow properties had almost entirely become a thing of the past in Perth - even in more affordable areas that used to attract a higher rental yield.

"Rental income has not kept pace with property growth, meaning investments that once were cash flow positive are no longer putting money in people's pockets - that leaves investors opting for a buy and hold strategy in higher growth areas," said Mr Dunkley.

"Some of the hype about finding cash flow positive properties in recent years may have actually cost some buyers; in deciding against dipping into their pockets to secure a higher quality property they would have potentially lost ground in the long term.

"The recent shift though means more investors are more likely to do well as they again focus on proven investment principles such as holding property for its compound growth advantage, therefore achieving better returns."

Mr Dunkley said the change in attitude had seen a lot more buyers turning to better quality properties within their budget and cash flow range.

"While early this year there may still be interest in more affordable areas with historically low growth, we believe that further into 2005 areas that will attract more investors, driving prices up further will be coastal suburbs north and south between the freeway and the ocean, river suburbs, areas within 10km of the CBD and suburbs benefiting from infrastructure or lifestyle developments such as railway lines or marinas," he said.

Mr Dunkley said Perth buyers could be heartened by the fact that it was still possible to pick up homes in long term performing suburbs for under $400, 000

He said the attitudinal shift had also coincided with a modest rise in investors entering the Perth real estate market, rising from 21 to 25% of the market in 2004.

He attributed the boost to more interstate and local investors recognising that, as well as offering comparatively cheap property with better rent returns than other capital cities, Perth was also experiencing more stable growth, with further positive growth predicted.

FOR MORE INFORMATION PLEASE CONTACT:
Ms Liz Sterzel
Managing Director
Property Wizards
Office: (08) 9381 7450