Investors in Western Australia should be aware of this emerging trend.
Investors in Western Australia should be aware of this emerging trend.
The upswing in the Western Australian agricultural sector over recent years has seen a growing number of farmers invest in the Perth property market.
For example, the Great Southern region of Western Australia recorded it second biggest grain harvest (2014/2015) at 3.25 million tonnes, which was just short of the previous year of 3.6 million tonnes, an all-time record.
In addition, the rural sector in Western Australia is also benefiting from massive new Chinese investment and there are now confident predictions that this will lead to a boom in agricultural production in the state over the coming years.
I am finding that this upswing in the rural sector is now resulting in a growing number of farmers investing in Perth property.
Farmers are by their very nature property orientated so when they have good seasons they tend to historically invest their profits in real estate rather than the stock market.
I have found that farmers have traditionally favoured investing in Perth real estate because it offers a secure investment with solid returns.
I have found that farmers tend to focus on near-city properties or coastal properties that have easy access to the city centre.
If the farmers have children approaching adulthood, they will purchase homes close to third-level educational institutions in Perth where there children can live while they are studying.
For farmers who are considering buying an investment property for the first time in Perth, they need to undertake careful research because there can now be major variations in capital growth depending on the location of the property.
At the same time, rental returns can also widely vary depending on the local demand for homes and supply.
Overall, weekly rents in Perth have been softening but there are still pockets of undersupply where astute rural investors can achieve above market rental returns and also strong levels of capital growth moving forward.
Rural investors should also focus on areas where there are major new capital infrastructure investments such as the Scarborough beachfront, which will attract millions of dollars in government and private sector expenditure in the next couple of years.
In addition, farmers should also use their property investment to fully maximise the generous tax benefits associated with buying property.
These generous tax benefits include negative gearing and depreciation, which can be used to offset high profits they may now be achieving in their rural enterprises.
Rory O'Rourke
Rory O’Rourke is the principal and licensee of O’Rourke Realty Investments in Perth and has been in the property industry for over 40 years.
Rory is a former Vice President of the International Real Estate Federation (FIABCI) Australian Chapter and was inducted into the International Who’s Who of Professionals for 2009/2010.
He has authored three best-selling books Born Free Taxed to Death, I sold 22 homes in one day and It’s Time… the Republic of Australia.
These books can be accessed at http://www.orourke.com.au/books.html
