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May 23, 2014 | Media Release
Where does Perth’s market sit at the moment?
Perth’s market has been experiencing fairly steady growth over the last 18 months, from a Median price of $480,000 in September 2012 to $545,000 as of March 2014. Demand for quality housing remains high, though rental vacancies have risen slightly from their very low 1.8% in September 2012 to 3.9% in March 2014.*
First Homebuyer demand may slow a little due to the WA State Government’s announcement that the First Homebuyer transfer duty concessions will be watered down from 1st July; however First Homebuyers in Western Australia are still better off in terms of these concessions than in most states, including Victoria. Coupled with the First Home Owners Grant of $10,000 for a newly built property or $3,000 for an established property, Perth still provides attractive incentives for First Homebuyers.
Are there any important factors at play presently that might differ from the Melbourne property market?
The Perth market has been a growth phase over the last 18 months to two years and there are no signs of it being at a peak. Real Estate Agents are still reporting receiving multiple offers on good properties and as buyer’s agents, when we find a good property we have to move on it immediately or are very likely to lose it.
The supply of subdivisible homes has dwindled, the increased scarcity combined with the consistent demand means that competition is high and prices are still being driven up.
What sorts of investment are generally popular in Perth currently?
We find that the types of investments are very much catering to Capital Growth based strategies, especially with value adding opportunities, such as properties for renovation or subdivision. We have also found an increasing number of investors wanting to put add-value properties into their Self-Managed Super Fund with the aim of building value for retirement through capital growth.
Perth does have a large number of new apartments coming onto the market, and we find these are snapped up quite quickly by a mixture of investors and homebuyers. These are quite affordable for most investors, and return a good rental yield; however they are less attractive for those focussing on capital growth.
For those looking for capital growth, purchasing a house close to Perth’s CBD is almost out of reach of the average investor. Popular options are to purchase villas (strata-titled properties on small blocks) or houses a little further out from the city that benefit from good transport links and close proximity to amenities and where possible have add value potential.
What has prompted your Melbourne based clients to look at Perth?
Many of our interstate clients, including those from Melbourne, are attracted to Perth due to:
Could you please take a quick look through the RP Data stats and let me know if any of them sound wrong?
Champions Lake (houses): 158.2 per cent growth (Current median of $510,000)
Piara Waters (houses): 124.5 per cent ($550,000)
Harrisdale (houses): 124.1 per cent ($568,000)
The above areas are all situated within the city of Armadale, and we believe their growth figures are skewed by the abundance of new developments in the area. These are still risky places to invest, due to the reputation of the area and the fact that the growth has not been proven over time. See attached article run in SPI Magazine regarding the area.
Burns Beach (houses): 122.6 per cent ($885,000)
This suburbs attraction stems from its location right on the coast and the many new housing estates that are popping up in the area. It is also very close to the city of Joondalup, however being a long way north of Perth CBD may slow growth somewhat.
Ascot (units): 60.3 per cent ($505,000)
Ascot is a well-established area close to the city that has been seeing development recently. This growth could be indicative of the suburb’s performance.
The suburbs above sound questionable. We recommend reviewing the official Landgate/REIWA figures for this property information. Below are the top 5 ranked for 5 year growth as of March 2014.*
|SUBURB||Median Sales Price – Year to Mar 2014||Annual % change for 1 year||Average Annual % Change for 5 years|
These are the suburbs from your RPData stats – showing a different growth picture.
Orelia (units): 7.3 per cent yield ($192,500)
Orelia is likely to have decent rental yield, as the property market there bottomed out a few years ago and hasn’t recovered, while rental rates are in line with the market demand.
Sorrento (units): 6.8 per cent ($345,000)
While units in Sorrento are likely to generate decent yield, these properties are very scarce, therefore not sure about reliability of this one.
Balga (units): 6.4 per cent ($307,000)
Brookdale (houses): 6.4 per cent ($309,750)
Coolbellup (units): 6.4 per cent ($324,500)
These suburbs are all expected to be good investments in terms of rental yield.
* Figures from Landgate/REIWA
** Figures from Australian Bureau of Statistics