FUTURE BRIGHT FOR BEACHSIDE SUBURBS

18th December, 2005

The future for strong capital growth in the increasing popular Perth beachside suburbs of Scarborough and Doubleview is bright, says Property Wizard's buyer's agent Trevor Dunkley.

He says the two suburbs have enjoyed good growth in the past 5 years - around 13 per cent a year - but a large gap remains between them and the neighbouring suburbs of City Beach, Floreat and Trigg.

"All these suburbs are very similar. They have great access to stunning beaches, are close to shopping centres and still within arm's reach of the city with good transport," he says.

"Scarborough is a little unique though in that, in addition, it is more of an urban commercial centre, with a good café and restaurant area, shops and areas of more dense living.

"While Scarborough and Doubleview are less prestigious than the other areas, the gap between them is still fairly large and it's likely that will continue to close in the years ahead as more council refurbishments take place."

Dunkley says the suburbs can be compared to Bondi Beach and Bondi in many respects.

"There is still somewhat of a stigma associated with Scarborough and Doubleview, although it's lessening with the new development and upgrades, but that aside it has similarities to Bondi Beach and Bondi due to the beautiful coastline, café strips and the fact they are leisure and tourist destinations," he says.

"Both also feature older character houses and are reasonably highly populated."

Scarborough and Doubleview also offer some city, hills and ocean views and have attractive leafy green streetscapes.

INVESTMENT POTENTIAL

Dunkley says both suburbs have experienced major redevelopments in recent years that have driven population growth and given them a 'lift', and he points out more changes are in the pipeline, with the local council's upgrade program designed to attract a new demographic of higher socio-economic residents.

"The project is currently at the stage of refurbishing the already sound beachfront area - including an expansion of the alfresco dining sections, improved landscaping and parking facilities and better pedestrian access - all of which are expected to bring in more residents and tourists," he says.

"There is huge investment potential in Scarborough and Doubleview, but investors will have to be clever in their selection to secure an outstanding property.

"A few years ago sub-divisible properties were being snapped up at really great prices by smart operators who sub-divided and built at the back, while at the same time giving the older home a cosmetic upgrade.

"These investors were making great profits, but as the strategy became more popular, selling prices jumped up and so the superior opportunities now rarely exist, as the higher prices have almost completely erased the profit potential."

Dunkley says while many people are still employing this game plan they are now relying on the projected high capital growth to make their "profit".

"The word of warning is that this is a very risky strategy," he says.

"With the correct knowledge and expertise there are still ways of securing sub-divisible blocks at the right price.

"Another good safe strategy is to buy an old house in good condition on a well located good size block and just hold for the long term as the scarcity and the attractions of the suburb will drive superior growth."

Dunkley says in the past smaller units that have been cosmetically renovated have also performed well, but it's likely that strategy has for the most part been exhausted.

PROS AND CONS

REIWA estimates rental vacancies in the area were at 2.4 per cent for the June 2005 quarter - similar to the total Perth vacancy rate.

Dunkley says the great location and lifestyle facilities make Scarborough and Doubleview attractive to tenants, and council plans for further upgrades around the beachfront combined with the planned redevelopment of the Luna Shopping Centre will continue to drive demand.

"Scarborough beach is considered by many to be the best beach in Western Australia, which is a plus in that the beach and surfing lifestyle draws in many people, but it's also a minus because it can lead to seasonal changes," he says.

"Rental vacancies can be higher in winter as many tenants come into the area to take advantage of the summer months and then move on as it cools down.

"This can be costly if it results in long vacancies - the key is to select tenants carefully."

There are a higher proportion of renters and fewer families with children in Scarborough than is the case in Perth overall, and 24 per cent are lone households.

WHAT TO PAY

The median house prices for the year to September 2005, according to REIWA, were $450,000 for Scarborough and $416,000 for Doubleview.

In Scarborough, prices start around $200,000 for a 1-bed apartment, ranging up to $1 million and more for a luxury beachfront apartment.

In both suburbs, older villas start from the high $200,000's while a newer townhouse in a good location will fetch more than $600,000.

A 2-bedroom house on a small block in both areas costs in the low $300,000's.

A 4-bedroom beachside house with ocean views in Scarborough is priced around the $1 million mark, while a similar home in Doubleview on an 800sqm block will be around $800,000.

"Blocks in Scarborough fetch around $275,000 for around 300 square metres and in Doubleview the same size block costs about $250,000," says Dunkley.

"Scarborough is generally that bit more expensive across the board because it's nestled right along the coast, while Doubleview is a suburb back from the ocean."

PROFILES
(Source of data for profiles: RP Data)

Scarborough

Scarborough is approximately 6 km² and is 12 kilometres from the Perth CBD. It has eight parks covering nearly four per cent of the total area. There are two schools and one childcare centre located in Scarborough.

The population of Scarborough in 1996 was 11,895 people. By 2001 it was 23,923 showing a population growth of 101 per cent in the area during that time.

The predominant age group in Scarborough is 20 - 29 years.

Households in Scarborough are primarily couples with children and are likely
to be repaying between $1000.00 - $1200.00 per month on mortgage repayments.

In general, people in Scarborough work in a professional occupation.

In 1996, 48 per cent of the homes in Scarborough were owner-occupied compared with 53 per cent in 2001.

Doubleview

Doubleview is approximately 3 km² and lies 12 kilometres from the Perth CBD. It has four parks covering nearly four per cent of the total area. There are two schools and two childcare centres located in Doubleview.

The population of Doubleview in 1996 was 6,013 people. By 2001 it was 12,562 showing a population growth of 109 per cent in the area during that time.

The predominant age group in Doubleview is 30 - 39 years.

Households in Doubleview are primarily couples with children and are likely to be repaying between $800.00 - $1000.00 per month on mortgage repayments.

In general, people in Doubleview work in a professional occupation.

In 1996, 59 per cent of the homes in Doubleview were owner-occupied compared with 64 per cent in 2001.