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March 30th, 2016 | Media Statement
Perth’s market shows signs of stabilizing, with an upswing in enquiries from both local and interstate investors, according to Perth buyer’s agency, Property Wizards.
Buyer’s agent Liz Sterzel said the Perth market has been in a lull for the past two years, with economists suggesting the market has reached its bottom, or is very close to doing so.
“Negative data around the slowdown and job losses in the mining industry has led investors to shy away from investing in Perth,” she said.
“More recently, however, we have seen signs that prices appear to be stabilizing as confidence in the growing tourism and oil and gas industries picks up the slack and investors move away from the overheated Sydney market.
“Accordingly, we have seen a pickup in enquiries as buyers begin to return to the market hoping to take advantage of the wide range of choices on offer.”
OPPORTUNITIES ABOUND IN QUIETER MARKET
Ms. Sterzel said most of the enquiries she is receiving are from investors looking for add value opportunities, with a focus on subdividing now or holding a property in a proposed rezoning area for later.
“Good add value properties remain a very popular investment strategy, and investors who are willing to do their research almost have their pick of properties,” she said.
“However, accurately priced properties with add value opportunities continue to sell well, no matter the overall state of the market, and it is important for investors to carry out thorough due diligence and move quickly when they find the right property.”
Ms. Sterzel said that areas with proposed rezoning, such as Wanneroo or Forrestfield, are especially popular for investors looking to purchase a property with extra capital growth potential, as these properties typically enjoy comparatively lower prices to suburbs already zoned for development.
“If you are able to purchase a property to buy and hold in one of these potential rezoning areas, you have the opportunity to either hold until your equity allows you to carry out the development yourself, or bank the land to sell to a developer when the market has lifted,” she said.
“Whether looking for a property in a proposed rezoning area, or a development property that is all ready to go, we recommend investors target properties with easy access to public transport, shops and other local amenities, and aim for properties closer to the city when possible.”
PERTH’S RENTAL MARKET STABILIZING
Ms. Sterzel also said that while the rental market has softened over recent years, the decline in rents appears to be stabilizing, though recovery may be slow.
“REIWA’s data for the three months to February 2016 showed the median rental at $400 per week, unchanged from the September and December 2015 quarters,” she said.
“Investors who are looking to buy and hold must be careful to purchase a property in an area that will appeal to tenants, such as those in close proximity to public transport and other amenities, and may need to consider offering incentives such as lower rents to attract and keep tenants.
“One thing it is critical for investors to remember is that success in property investing comes down to time in the market, and with careful understanding of their budget and potential cash flow the savvy investor will be able to ride out these quieter market conditions and reap the rewards of the next upswing.
“Perth has never experienced a ten year period without house price growth, and with the expectation that prices are at or near bottom, and large numbers of housing stock available, there are opportunities for both new and seasoned investors who remember that money is made in the market, not on the sidelines.”