PERTH PROVIDING RELIABLE REAL ESTATE FOR INVESTORS

June 19th, 2005

Perth will continue to provide investors with plenty of reliable real estate opportunities into the next financial year, according to Subiaco property buyer's consultancy Property Wizards.

"Real estate in Perth is still recording strong growth while the other states are suffering," said Director Trevor Dunkley.

"And because our economy is ticking along very nicely, with all signs positive for the future, we can expect even more people to move into the state.

"This will keep demand for quality housing high and further drive up prices."

REIWA figures reveal the median price of houses in Perth increased by 13.3% to $284,000 in the year to March 2005. Mr Dunkley said those sorts of positive trends being experienced in WA's real estate market made it the ideal time for property investors to enter the market.

"Due to the large numbers of people being attracted here, particularly by the boom in the resource sector, cleverly selected properties are likely to experience good tenancy rates," he said.

"It really is a very exciting time for real estate investors - especially those recognising that even if further interest rate rises materialise, the Perth market has enough steam in it to keep powering ahead for the long term."

Mr Dunkley said there was much competition for quality investment properties, with investors making up more than 25% of all purchases in the March quarter. He said that meant it was crucial for investors to keep some key tips in mind when getting into real estate.

They include: KNOW WHAT TO PAY Appearances can be deceiving and what may at first seem to be a great buy, may not actually be upon closer inspection.

For example, Mr Dunkley said it was a common mistake for people to automatically think that they were getting a good deal if they could negotiate the price of a property well below the initial asking price. "Just because you can pick up a property for $25,000 less than it was originally put on the market doesn't instantly mean you should snap it up," he said.

"Unless you've done all the research, including looking at sales of comparable properties in the area, you may not know the property was overpriced by $50,000 in the first place and you've actually overpaid."

KNOW WHERE TO BUY It's easy to get caught up in the hype surrounding particular areas, but looking at the potential for long term growth is critical. "There is never a shortage of 'buzz' suburbs around, but many of them can disappoint the buyer over the long term, if there is no real substance behind the hype," said Mr Dunkley.

"It's imperative buyers assess the likelihood for growth over the long term by looking at what, if anything, will make that suburb attractive both now and into the future. "It's often better to put your money into an already proven area and achieve consistent growth than invest in a slightly cheaper suburb that has no prospect over the long term."

FOCUSING ON CASH FLOW ALONE The practice of searching only for cash flow positive properties is a bad move for investors. Mr Dunkley said there were limited opportunities in Perth to find a property that would put cash in your pocket every month - but many investments that would deliver huge returns in growth over the long term.

"A property that is cash flow positive may seem good in the short term, but many of them do not increase in value over the long term, meaning you are reaping the benefits now, but will pay later," he said.

"If you are determined to acquire cash flow positive properties, make sure they are just one part of your overall real estate strategy."

ACT SOONER RATHER THAN LATER There is always the potential to buy great investment properties - waiting for the 'right time' can be your worst enemy. "All too often we hear buyers tell us they are kicking themselves for waiting too long to get into real estate and that they let other issues distract them from getting in," said Mr Dunkley.

"Even in the worst of markets, opportunities are there for the taking. It really is the waiting that can cost an investor dearly. "There are many high performing suburbs in Perth that are now out of reach for the average investor, but 10 years ago, a lot of them probably weren't, so getting in as early as possible is of utmost importance."

For more information, please contact
Mr Trevor Dunkley
Director
Property Wizards
trevor@propertywizards.com.au
Tel: (08) 9381 7450