ARMADALE

July 24th, 2005

API Buyers chasing affordable housing and homeowners seeking a semi-rural setting will continue to be attracted to Armadale, according to Trevor Dunkley, Director of Perth buyer's agency, Property Wizards.

At March 2005, Real Estate Institute of WA (REIWA) figures reveal the median house price in Armadale, which lies 25 kilometres south east of Perth, was $145,000.

"The south-east corridor that lies along Albany Highway is one of the last few places relatively close to Perth where it's still possible to pick up a 3-bedroom double brick home on a 700 square metre block for around $180,000 and land for under $100,000," he says.

"That means for first time or cash conscious buyers, as well as those wanting to live around Perth's pretty foothills area, Armadale remains an attractive option.

"It has a fairly similar draw to that of Campelltown or Penrith in Sydney."

INVESTORS

However, Mr Dunkley says investors wanting to buy into the area will need to carefully search for superior properties in a bid to achieve long term success.

"While REIWA figures show median house prices in Armadale grew 16.1% a year from 2002 to 2005, the suburb has not performed as well as other areas of Perth over the long term," he says.

"Looking at the period from 1981 to 2001 reveals median house prices in the area grew at just 4.7% a year.

"The recent growth has occurred in a classic "catch-up" phase fuelled in the late stages of the recent property boom."

RENTAL RETURNS

He says the surge in the last few years has seen positive cash-flow opportunities in Armadale diminish considerably.

"Rental growth has not kept up the pace with median price increases of late, so that type of investment has all but disappeared," he says.

In 2002, house rentals were around $140 to $150 a week, with the median house price hovering around $92,000.

Now, with a median of $145,000, rents remain around $150 to $160 a week.

"There's definitely room for rentals to increase, after returns dropped from 8% to 5%," says Mr Dunkley.

REDEVELOPMENT

Mr Dunkley says a planned redevelopment that aims to make Armadale an important regional centre, much like the Sydney suburb of Parramatta, may prove positive, but he cautions it could stay a higher risk area for investors over the long term.

"Growth in new land estates and initiatives such as the refurbishing of shopping and transport facilities could mean above average growth for the next year or two.

"Without attractions like proximity to the city and river though it's unlikely to be as successful as the Subiaco and East Perth redevelopments and so it's possible it will revert to a lower long-term growth area.

"Investors keen to buy in Armadale must keep in mind that property selection will be absolutely critical as those past growth trends suggest there's no guarantee of superior long-term returns."

ARMADALE PROS & CONS:

CONS

Distance from city
Distance from ocean & river
Relatively low long-term growth

PROS

Natural bushland, abundant parkland & semi-rural lifestyle
Affordable housing on larger blocks
Potential for short term gains in new estates and proposed rezoning areas
Redevelopment plans

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