NORTH PERTH, LEEDERVILLE & MT HAWTHORN

18th May 2006

Sought after character homes on leafy streets in North Perth, Leederville and Mt Hawthorn are proven winners for cashed-up investors, according to Perth property buyer's agent Liz Sterzel of Property Wizards.

Sterzel says the near-city suburbs will continue to offer investors superior long-term growth prospects.

"For those who can afford it, many properties in these areas are wonderful investments," she says.

"Those that enjoy great growth in particular are character homes on lovely streets as they are in limited supply which helps to protect property values."

LIFESTYLE ATTRACTIONS

Sterzel says North Perth, Mount Hawthorn and Leederville have many lifestyle attractions, thanks largely to Leederville's fashionable Oxford Street which she describes as like a micro Newtown in Sydney.

"There are lots of funky little shops, restaurants, pubs and clubs packed with an interesting mix of people," Sterzel explains.

"All three suburbs are also less than 10 kilometres to stunning Scarborough Beach which has its own buzzing micro-café strip that stretches up Scarborough Beach Road.

"They are also close to Perth's main nightspot, Northbridge."

North Perth, Leederville and Mt Hawthorn are densely populated areas, are just a few kilometres from the CBD and offer good access to freeways, buses and trains.

"The great vibe and lifestyle elements attract younger people, but families are also drawn into the areas because they boasts many established schools and facilities," says Sterzel.

"There are a number of parks and recreation centres nearby and just across the freeway is Lake Monger featuring cycle tracks and plenty of grass and trees."

GROWTH

Sterzel says prior to the boom, in the 15 years to December 2002, North Perth, Leederville and Mount Hawthorn all featured in Perth's top 15 long-term growth areas.

The median house price in North Perth (March 2006) is $485,000, $522,500 in Leederville and $485,750 in Mount Hawthorn.

Median house prices in North Perth have grown 12.8 per cent in the year to March 2006 and 12.8 per cent a year over the past five years.

In Leederville, the median house price has risen 17.2 per cent in the year to March 2006 and 14.5 per cent a year over the past five years.

Median house prices in Mt Hawthorn have grown 15.5 per cent in the year to March 2006 and 13.3 per cent a year over the past five years.

Sterzel says the growth has been spurred on by ongoing upgrades and developments.

"Over the past 10 years, many properties have been renovated and made-over which has helped drive up prices of some of the beautiful Federation-style homes," she says.

"As well, zoning changes have lead to high-density townhouse developments in some parts and have allowed many homeowners to undertake subdivisions."

Sterzel says with the areas recording stable good growth, the future looks bright.

"High-end properties already generally double in value every seven years and as Perth grows forcing people further out, properties this close to the city will become more and more valuable," she says.

THE MARKET

Sterzel says with high demand and a shortage of properties in the area, those placed on the market are snapped up fast.

"The motivation for most buying in North Perth, Leederville and Mount Hawthorn is to upgrade and live in the home, or rent it out as is and hold onto it for excellent growth," she says.

As at May 17, 31 properties were available in North Perth, 4 in Leederville and 14 in Mount Hawthorn.

INVESTMENT STRATEGY

Ms Sterzel says the best investment strategy for these suburbs is to buy the right property and hold onto it for long-term growth.

"The properties to add to your portfolio are the well maintained homes in character streets that are structurally sound and sit on a block of 400 square metres plus, but they will cost over $500,000," she says.

"When looking for a property in any of these suburbs, ensure you check that there are no roofing, plumbing and electricity problems as some people take on a renovation project without realising the extent of work needed and get stuck with cost blow-outs.

"Unless you're a confident, knowledgeable renovator it can often be better to buy a property someone else has done up."

Sterzel says there are also opportunities for the more professional investor.

"They are now quite rare, however there is the potential to secure a subdivisible site that can allow you to add value," she says.

"There are also larger sites available on main roads that can be used for commercial and residential redevelopment."

RENTAL RETURNS

Sterzel explains the opportunity cost of purchasing properties with secure superior long-term growth is a sacrifice in rental yield.

"Although rental returns won't be much more than three per cent, unless you add some value, you will be rewarded with excellent growth in the long run so if you can afford the holding cost, it will be worth it," she says.

"The condition of the property has a big impact on rental return - original condition houses do not fetch as much in rent, so investing in the garden and cosmetics of a house in good nick will bring better returns."

The percentage of rental properties in North Perth, Leederville and Mount Hawthorn is between 22 per cent and 38 per cent, almost equalling the percentage of owner occupiers at 29 per cent to 38 per cent (source REIWA).