Psaros / News

In property, timing is everything

Ready to invest in your very own property portfolio? Now might be the perfect time

For many investors, the property game can be a nerve-wracking process as you try to balance risk vs reward. Not wanting to miss an opportunity to make money, while at the same time not wanting to lose any money, can lead to some tricky questions about what property is safest to invest in and at what time. If you are seriously considering building a property portfolio to secure your financial future, then it is vital to commence research now in an effort to capitalise on current market conditions. There are some great deals available at the moment and it is important to secure property before the market starts to recover, but it’s also essential not to rush into a decision before conducting thorough research.

Location

Current market conditions may provide you with the opportunity to get into an area that was previously out of reach. However, if you really want to maximise your long term capital growth and ensure you get the lowest vacancy rates and highest rental yields, then it is important to understand that there is more than just median house price to be considered when looking at location.

Supply

A hotly debated theme in the media at the moment is the topic of apartment oversupply. Most of the discussion surrounding this issue is based on the number of apartments that are actually planned.  However, what is not widely known is that the high level of forecasted population growth will absorb this suggested over-supply.

Based on WA Planning Commission and WA Tomorrow projections, the population of Perth city centre has steadily been growing by nearly 2,000 people each year and will continue to do so.  The number of apartments actually being built is approximately 25 per cent of this figure, so rather than an oversupply, there is a strong argument to suggest the current stock will be absorbed quite quickly.  

Areas such as Perth, West Leederville and Scarborough have a high level of supply but they are also located in the heart of great lifestyle amenity choices and so will always be desirable. As an investor, consider the long-term when evaluating what appeals to tenants, not just what is happening in the area in the short term.  

Infrastructure

There are a number of major infrastructure projects that are well underway across the Perth area including Elizabeth Quay, the new Perth Stadium, and the Scarborough redevelopment. A good investment tip is to pursue property around this new key infrastructure and buy before these projects are complete and become the new property hotspot.

Amenity

Perth has embraced apartment living and an inner-city way of life and this has led to a huge uplift in lifestyle amenity including new shopping strips, cafes and transport options. Added to this are the many State government and local council initiatives that have been created to enhance areas and improve facilities around Perth to prepare for the expected future apartment demand.

One hot tip for investors is to always look for properties that are located near transport nodes and lifestyle amenity choices as these are the type of well-located properties that appeal to tenants.

Timing – get to know the property clock

It is common sense to buy in a market that’s at the bottom of its cycle, and due to the cyclical nature of property we know that the start of a recovery is fairly imminent.

According to leading analysts, Perth is currently at the bottom of the market. How long until a recovery cannot be predicted with pinpoint accuracy and generally only retrospectively. By the time the media announces the market has turned, it will be too late for you to take advantage of the affordability at the bottom of the market.

Affordability and value

Affordability is at an all-time high which is a great thing for Perth. The mining boom stretched people to their financial limits so a correction was needed and here it is – embrace it.

It’s not just much-needed competitive pricing heralding a new era of affordability, but there are now great opportunities to strike a deal so don’t be afraid to negotiate.

Interest rates are also at a record low, which not only helps repayments for a period of time, but also represents an opportunity to invest by releasing existing equity at today’s low interest rate and using the funds to pay for a new investment property.

Future Outlook

It’s a positive long-term outlook for Perth property investors with population growth, planned infrastructure and a Perth mindset change embracing apartment living and an inner-city way of life.  

This is not a time to be flipping properties; it’s time for the savvy investor to research the great options out there and make some serious cash in the long term.

Key Takeaways

-          Don’t jump in to buy in an area you desire but previously couldn’t afford, consider all the aspects of location that appeal to tenants

-          Now is the time to buy at the bottom of the market

-          Best affordability in a generation

-          Opportunity to negotiate on price and cut a deal

-          Forward planning – population growth (double by 2050) and planned infrastructure – look at the longer term

potential of an area

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