The current prevailing conditions in the Perth property market represents an opportunity to implement a long term investment strategy.
Current Market Situation
A growing population combined with a cultural shift have been the catalysts for a surge in demand for apartment style living in recent years resulting in an increase in the apartment market to meet demand. But the unfortunate rapid decline in the mining industry and slower than expected offset by other industries has seen demand plateau quicker than expected, leaving property buyers in a great position with more choice.
And whilst the mining boom brought with it incredible benefits to Perth, it also placed upward pressure on property prices. The recent turn of events has led to a softening in prices and although uncertainty has surrounded the property market, it has led to the most affordable housing Perth has seen in ten years. The current prevailing conditions in the Perth property market represents an opportunity to implement a long term investment strategy to buy property today at an affordable price and sell at a higher price when the market recovers.
The Future is Bright
Perth reached an inflection point when the population surpassed 2 million people, and despite the mining downturn, it’s still on track to reach 4million by 2050. To meet this population surge, more than 750,000 new dwellings must be built in the metro area. Western Australian Planning Commission forecasts estimate that 48% of all new dwellings in the Perth metro area will be through infill developments, translating into the delivery of 9,500 completed apartments each year for the next 40 years.
Our city is on the cusp of an exciting transformation with major infrastructure projects set to turn it into a truly world-class destination. These projects will enhance liveability and encourage greater investment in and around inner Perth. Ultimately, they will help attract world-class events to Perth, which in turn will bolster tourism activity, create more jobs and lead to even greater demand for new inner-city dwellings.
Once this infrastructure arrives, property prices in inner Perth will also benefit – yet another reason why astute investors are beginning to see the city’s potential.
Seize The Day
It’s no secret that the Perth property market is currently skewed in favour of buyers. Ample choice, low interest rates, and considerable value to be gained from developer incentives provide an unprecedented level of opportunity and affordability making now an ideal time to buy or invest in the Perth market.
If you’ve been considering securing an apartment, it pays to know you’re getting the right extras to suit your individual lifestyle needs.
There are many, and it varies depending on the developer and the project, so how do you know which has the most advantages for you?
Shop around but realise that rates won’t stay this low forever - using interest rates to your advantage when buying property can have a significant impact on loan repayments over time. The more you reduce your loan while interest rates are low, the less compound interest your loan will attract – and the better shape your finances will be in for the long run.
Lock in a low rate while you can but make sure you ask your lender if the interest rate is fixed for five years, what happens after that? Do you just go straight onto the bank’s normal variable rate? Or do you start paying at a higher rate?
Rents have softened providing a great opportunity to start saving for that deposit – buying off-the-plan now means you have 12-18months to capitalise on low rents to build up your capital without missing the buying opportunity if the market turns within that time.
Alternatively, look closely at how much you are paying in rent and whether it equates to a mortgage repayment. Stop giving the money to your landlord and put it into your own future instead.
If you’re an investor did you know that remortgaging an existing property at today’s rates could save you enough to buy an investment property? This is quite simply the quickest way to build a property portfolio – use your existing equity to secure additional properties at a time when property is at its most affordable. There are also tax incentives that make owning an investment property even more profitable. If you need help on that topic, Psaros has a tool called MyInvest which enables you to plug in an apartment number and all associated costs are calculated for you.
First Home Buyers
First homebuyers who build or purchase a new home currently receive a $10,000 grant which means it’s a great time for first home buyers to buy a new or off the plan apartment. It’s all about location – apartments allow first homebuyers to move into a location that they might not otherwise be able to afford with the traditional house and land option.
Remember! Whilst you’re looking at the specifics above, in addition to price, bear in mind these common sense tips to ensure you get the best return on your investment:
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