PERTH PROPERTY KEEPS POWERING AHEAD IN 2006

16th January, 2006

The Perth property market is expected to continue powering ahead in 2006, but at a rate of growth slightly lower than that seen in 2005, according to Property Wizards buyer's agent Trevor Dunkley.

Mr Dunkley predicted the market could rise between 7 to 8 per cent this year, if several key factors played out as expected.

"The long term rate of growth in the Perth market is 8.5 per cent a year," he said.

"If inflation continues to stay on the higher side then it's likely we could see interest rates increase, the effect of that could temper demand for housing slightly and therefore slightly dampen property growth.

MARKET STRENGTH

Mr Dunkley said despite predictions of a slightly slower rate of growth, the local market still offered the best growth prospects across the nation.

"WA's property sector will remain stronger than the rest of the country this year as the reasons for its strength - our solid economic growth, the resources boom and good population growth - are likely to remain intact," he said.

"These factors ensure demand for housing is high, causing property prices to rise.

"What helps to insulate Perth from the falls seen in other markets around the country is the increased demand stimulated by interstate and overseas migrants - it's simply that there are more people needing a home to live in and that forces prices up."

Mr Dunkley said the recent experiences on the East coast should not cause concern for Perth heading into 2006.

"Perth prices have not increased at the same rate as the Eastern state capital cities, leaving scope for further price rises here, as well, the Perth property cycle has shown itself to be more independent because of those driving economic factors," he said.

SUPPLY

Mr Dunkley said it was likely the housing market shortage that gripped Perth in 2005 would continue over the next several months, at least until the rate of price growth slows.

He said, despite this, there were still good quality properties coming onto the market.

"Properties under $400,000 will probably still be in fairly short supply, especially those in the lower price ranges - and the trend seen last year where buyers were paying more to ensure they don't miss out on securing a property could also be repeated this year," he said.

"The message for investors in 2006 is that it's going to be tough to secure the homes they want, because there will be many more buyers than properties for sale.

"Half the buyers in the market are tyre kickers, a quarter are out looking but aren't really ready to act, and the other quarter are genuine buyers who are often ready to pay too much.

"In a nutshell, that means investors will have to fight to get the best properties at the right prices - that is, they need to be ready to act, or have a representative ready to act for them.

"In this market, if you don't move like lightning, you risk losing the purchase and having to start your search all over again - but it's also critical to keep a cool head so you don't end up paying too much.

"One critical factor in these times of high demand is selection as the 'frenzy' of the market can force investors into picking up properties that will under-perform in the long run."

Stocks of homes over $400,000 were also tipped to remain low, while demand stayed high.

Mr Dunkley said the same advice as for those properties under $400,000 applied and warned buyers not to overpay when competing with uninformed or emotionally driven bidders.

WHERE OPPORTUNITY KNOCKS

Mr Dunkley suggested there were key types of properties that would perform better-than-average.

"Houses under $400,000 in coast-hugging suburbs and properties under $300,000 in suburbs one or two back from the ocean, both in the north and in areas along the Rockingham to Mandurah strip, are still very good places to direct your investment dollars," he said.

"That's because very soon there will be no homes on decent sized blocks in these areas that haven't risen out of the reach of most buyers.

"As well, search for homes in suburbs that are set to reap the rewards of lifestyle or infrastructure projects, particularly in locations near the beach, the city or near superior transport facilities."

Mr Dunkley said another winning strategy was to buy properties that were set to gaining subdivision 'rights' at a future date.

"These are properties that can often be bought today's single home price, but that offer far superior growth potential because they've been given approval for future development if the owner desires," he said.

TIPS FOR INVESTING IN 2006

"The biggest downfall in a booming market is to think any investment will turn to gold," said Mr Dunkley.

"Don't just buy to get in - if investors are not careful to buy in areas that are driven by several growth factors, they could pay a high price down the track.

"Another key strategy is to buy properties where you can add value, either through renovations or sub-dividing, and then hold it to achieve superior growth."