The latest REIWA figures for the June 2015 quarter highlight the fact that buying an apartment in Perth can still deliver high rates of capital growth – even in an overall soft property market.
During the past year, the median price growth rate for apartments/units in the top 10 performing Perth suburbs ranged from 10.5 per cent (Rockingham) to 19.2 per cent (West Leederville).
Apartments still offer an affordable entry point to high-growth suburbs as highlighted by the top performer during the year – West Leederville – where the median price for an apartment/unit is still only $450,000.
For the past 15 years since I have been involved in property investment, I have been hearing time and again that there will be an oversupply of apartments in Perth and prices will fall.
This generalised view of the apartment market does not take into account what is actually happening on the ground or the growing demand for apartments due to demographic and lifestyle changes in the Perth community.
One key factor, however, that has not changed over the past 15 years in the medium- to high-density market is that when you are investing in an apartment development in Perth, location is king.
Apartment developments in good locations that are built to a high standard and competitively priced continue to sell very well in Perth.
Looking to the coming year, key inner-city fringe suburbs where the apartment market is expected to perform extremely well include North and West Perth, Maylands, Burswood and Rivervale.
As well as capital growth, these suburbs should also continue to deliver exceptional rental yields given the aggressive population growth rate.
Therefore, investors need to be very selective in the location where they purchase an apartment within Perth if they are to acquire a long lasting performing asset to their portfolio.
Tips on buying an apartment in Perth
1. Take your time when buying an apartment. Don’t make decisions based on emotion. If you buy the right apartment, it can deliver high rates of capital growth that can be equal or even surpass a larger family home in the outer suburbs.
2. A balcony with an attractive outlook can enhance the resale value of the property. Apartments which have larger balconies or terraces are becoming more popular because of lifestyle factors. A spacious balcony or terrace with an attractive outlook could be more appealing to a potential tenant than an apartment without.
3. Check the internal living area of the apartment(s) and ask, “is that calculated from the internal face of the wall or the external?”. It may not sound like much, but if you calculate the lineal (in a direct line) metres of an apartment and times that by the thickness (of the wall) , it can equate to a substantial amount of square metres that in fact is not living area.
4. If you are buying off the plan, check previous developments which have been undertaken by the builder and or developer to determine their ability to deliver what they are promising. Remember, any builder constructing multi-storey– multi-unit developments (more than three storeys ) is exempt from obtaining home indemnity insurance.
5. Always read the contract of sale document(s) before signing, and ensure you are aware of your obligations under the contractual terms. Most contracts for off-the-plan apartments are “cash” offers (not subject to finance approval ), meaning even if you do not pay the deposit, you are still legally bound to purchase and settle on the property.
Daniel McQuillan has held senior positions in the property and financial services sector for over a decade. During that time he has gained professional qualifications and a wealth of experience that has enabled him to personally build a very successful property portfolio based on a targeted plan. In 2011, he established Investwise so he could utilise these skills to help other people create wealth through similarly devising a personal investment model that best suited their personal circumstances. As a result of this targeted and personal approach to property investment, Investwise is now one of the fastest growing property investment advisory services in Western Australia.
Further information can be found at www.investwise.net.au.