April, May and June can be a busy time for property investors as they organise portfolios before the end of the financial year. With the 30th of June just around the corner, the Western Australia property market has seen a renewed interest from investors, largely driven by rising rental prices set against a backdrop of well priced property.
Investors Re-emerging in WA
There haven’t been too many investors in the West Australian market over the last year, but they are certainly starting to re-emerge as the housing market stabilises, the state’s population grows, vacancy rates fall and the rental yield increases. Many potential investors who have been waiting and watching the Perth market, in particular, following the decline in prices since 2010, now sense that it’s an opportune time to look at entering the market.
Currently there are around 13,300 properties for sale in the Perth metropolitan area, down by at least 4,000 properties on the same time last year, and those in a position to buy are finding good value and great long term prospects.
Where are the investors looking?
Most investors in the WA market are looking to invest in places where there is consistent population growth, such as near the city or some of the rapidly growing regional centres. In particular, in Perth investors are attracted to units, villas and houses that are close to the CBD with good transport access. Suburbs such as Maylands, Morley, Belmont, Rivervale, Bassendean, Cloverdale and Carlisle are popular. However we are also seeing interest in areas such as Craigie and Joondalup in Perth’s North, and Baldivis in the south.
In the regional areas, Derby has experienced 24 per cent median price growth over the last year and Geraldton continues to grow in population. In the southwest, Busselton and Dunsborough saw big price falls in 2008-10, but this seems to have bottomed out and buyers are now returning to find good value.
In general, investors are generally mindful of areas that are affordable, and generally at or around the median price and which have reasonable prospects of good growth in value. The ideal investment location is where demand for rental properties exceeds supply, but investors should always balance the entry costs of a new purchase with the return on investment through rent. With rents having gone up in Perth strongly over the last six years, tenants are now more demanding and have higher expectations. The dwellings that generally produce the better returns are those that are appealing, such as renovated homes with nice kitchens, bathrooms, flooring and air-conditioning. Generally, modest improvements in an older property will bring greater reward.