The Perth market still offers good opportunities for investors, particularly those who are willing to get their hands dirty and give a new lease of life to the neglected rental stock in these suburbs.
Blogger: Daniel McQuillan, executive director, Investwise
Investor confidence in the Perth real estate market still remains positive because of high levels of public and private sector spending on infrastructure such as the new $1 billion Perth Stadium at Burswood.
Although property prices in the established housing market in Perth have softened over recent months, there still remain excellent opportunities for investors to purchase prime real estate with great capital growth potential, especially in the near-city suburbs of Perth.
Some of these areas have a high proportion of rental properties such as South Perth and Victoria Park and there are opportunities to turn ‘ugly duckling’ ex-rental properties into swans through cosmetic renovations.
Traditionally, ex-rental properties that have been neglected by their owners have offered excellent opportunities for astute first home buyers in the Perth real estate market.
This is particularly the case with self-managed investment properties because many of these owners lack the discipline to carry out regular property inspections and ensure that necessary maintenance is completed, such as replacing carpets or repainting internal walls.
A typical investment property of this kind may be one that has been leased to a successive number of students, with the owner trying to sell the property while it is still under lease.
Poorly presented former rental properties are severely penalised by property buyers, even though a small investment can totally rejuvenate these homes.
With more than 14,000 established homes for sale in Perth, ex-rental homes that are poorly presented are now overlooked by most buyers and therefore can be purchased at a significant discount than would apply in normal market conditions.
A large number of rental properties generally come onto the market during the first months of the financial year as owners decide to dispose of assets after reviewing their finances.
Astute homebuyers should focus on well-located areas that have an above-average rate of rental properties, which means the chances of buying a poorly presented property are higher and the buyer has confidence that it is located in an area that historically achieves high levels of capital growth.
Most suburbs in Perth have around 28 per cent of properties that are rental properties. However, there are a number of suburbs where rental properties account for well over 40 per cent of the housing stock and a larger number of these suburbs historically achieve above rates of annual capital growth.
For example, in Maylands more than 50 per cent of all properties are rented and the suburb achieved an annual growth in median house prices of 7.7 per cent over the past year compared to an overall drop in the Perth median house price of 1.8 per cent.
Suburbs with high levels of rental properties in well located areas include:
Prime Near City Suburbs (Source: REIWA)
Northbridge, 70.4 per cent of homes that are rental properties
Highgate, 63.6 per cent of homes that are rental properties
Bentley, 60.4 per cent of homes that are rental properties
West Perth, 60.1 per cent of homes that are rental properties
Victoria Park, 54.4 per cent of homes that are rental properties
Burswood, 53.0 per cent of homes that are rental properties
Maylands, 52.4 per cent of homes that are rental properties
Subiaco, 48.1 per cent of homes that are rental properties
South Perth, 46.9 per cent of homes that are rental properties
Scarborough, 44.2 per cent of homes that are rental properties
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.