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December 12, 2014
When venturing out to explore Perth’s cheapest median price suburbs for 3-bedroom houses within 20km of the Perth CBD (as identified by API data), what you’ll find is older and tired established areas with a scarcity of new housing estates and as a result, hungry for a taste of urban renewal.
For Perth first homebuyers or entry-level investors choosing to skip past the apartments and instead look for houses at affordable prices, yet still be within 20km of Perth, there are generally two choices.
The first choice is an older established house on a larger 700-800sqm block, or occasionally a new, smaller house on a tinier 200-300sqm block.
While in many areas new houses are often more expensive than older dwellings, in these areas the prices are comparable because of strong demand from developers wishing to chop up a block and make some tidy profits from it. This demand generally makes the larger blocks with older houses more valuable than the smaller blocks with new houses. We find that this is what the entry-level investors are targeting, to take advantage of the potential equity or profit achievable in the future.
Perth first homebuyers on the other hand typically prefer buying a house in an affordable big new estate, which is usually much further from the city.
Here first homebuyers can buy a big, brand new house or house-and-land package and live surrounded by similar properties. If they do choose to live closer to the Perth CBD, first homebuyers still tend to prefer new houses.
Perth’s north: Girrawheen, Koondoola
Both Girrawheen and Koondoola are just 15km north of the Perth CBD. Not only are they easily accessible to city, but they’re also around 10km to the beaches of Marmion and Hillarys.
Suburbs to the north, west and south are more expensive – making Girrawheen and Koondoola cheaper options with potential to catch up.
Both suburbs offer small pockets of cheaper housing, many of which are three-bedroom homes. The demographic is multicultural on below-average median incomes. Girrawheen has had a reputation for being ‘rough’, which has put off some first homebuyers and investors.
Despite some rough patches, Girrawheen and Koondoola have the potential to go through a period of gentrification in the future, particularly as the council has proposed rezoning for denser development, which will encourage new houses, amenities, infrastructure and services.
In Balga, the next suburb south of this cheap cluster, the gentrification is already occurring and we’ve seen prices pushed up as a direct result. As Balga becomes too expensive, investors and homebuyers are likely to move one suburb north, into Girrawheen, where the gentrification process is likely to happen next.
Buying into Girrawheen or Koondoola with the expectation of urban renewal and price growth as a result should be considered a very long-term strategy, as gentrification is a slow process. While the expectation of urban renewal, new development and price growth will result in a higher grade of tenants and owners, it will take a while to shake off the stigma.
Despite the stigma, Girrawheen and Koondoola are very attractive to homebuyers and investors as they provide great transport links to the city down Wanneroo Road and Alexander Drive. Just one suburb away is the Mitchell Freeway and Clarkson train line, providing even further option for commuters.
These areas are also reasonably close to the ocean and great shopping and dining at Hillarys Boat Harbour. For young professionals who work in the city or investors looking for a small buy-and-hold investment with long-term development potential, these suburbs could be just the right place to get into now for future rewards.
Perth’s northeast: Midland, Stratton, Bellevue
In Perth’s northeast you’ll find one of the city’s larger suburb clusters of cheap 3-bedroom houses. These suburbs revolve around Midland’s gentrification and growth to become a city in its own right.
Midland is one of Perth’s major regional centres where intense development is taking place, primarily in the form of apartments or 3-bedroom houses on smaller blocks. There is some risk of oversupply due to the level of development going on, but we generally expect the demographic and subsequently the prices to lift in the long term.
This area is very attractive to young people on a moderate wage, especially tradespeople who can find local employment in the thriving industrial areas, or professionals who work in Perth city.
Public transport on the Midland train line makes the Perth CBD accessible in less than 40 minutes. The Great Eastern Highway upgrade has also improved accessibility. Young families benefit from the number of schools in the area. Finally, the overall area is attractive due to its proximity to the Swan River, the Swan Valley and the large retail centre in Midland.
Perth’s southeast: Gosnells, Maddington, Kenwick, Langford
This large cluster of suburbs is certainly where you’ll find cheap 3-bedroom housing in Perth’s southeast.
Though what differentiates this area from the north and northeast areas is the limited amount of opportunities available here for redevelopment. While there are pockets of development and renewal, these suburbs are firmly established; only small pockets are zoned for redevelopment.
While there will be some price rises around these pockets, which will attract a higher grade of tenant and owner, there is unlikely to be a significant shift in the demographic of the total area.
While still located within 20km of Perth’s CBD and linked by the Armadale train line and Albany Highway, these areas are generally thought to be more difficult and time-consuming to access. Gosnells is located furthest from the city; 30 minutes along the most direct rail route.
The perception of being a little ‘out of the way’ will mean that properties here that are similar to those in the northeastern cluster may be less attractive to new homebuyers and investors when priced similarly. As a result, the growth may not be as strong. Families seeking affordable housing are likely to live here, as well as those employed more locally.