Investors in this city have been struggling with falling prices and increasingly high vacancy rates – but wise suburb selection in 2016 could again see them reaping attractive returns, according to a prominent industry commentator.
Investors in Western Australia can capitalise on the state’s softening real estate market by targeting affordable properties in city suburbs such as Mandurah and Medina, where rental demand is showing signs of improving.
That’s according to Geoff Baldwin, managing director of Re/Max WA, who believes that 2016 is set to offer new investors the most attractive returns seen in two decades.
“I have worked closely with property investors for almost three decades and the late 1980s and early 1990s was probably the last time we saw such an availability of real estate in Perth and in other areas of WA offering such attractive returns,” Mr Baldwin explained.
Mr Baldwin highlighted the cities of Mandurah and Bunbury, and the Perth suburbs of Medina, Calista, Camillo, Hillman, Armadale, Parmelia, Merriwa and Balga, as his top affordable areas demonstrating high rental demand.
“Investors should look for areas where they can buy a property at or below the average price in the area, where a large number of tenants are looking for houses to rent and where the land value equals or better still, exceeds the value of the structure,” Mr Baldwin explained.
“Also keep in mind the age old rule that [...] the lower the sale price, the more chance of a higher percentage return.”
Major city markets in WA have been struggling to cope with the downturn in the mining related economy in recent years, with debate over where the market currently sits.
Disputing those comments, Damian Collins, managing director of Perth-based Momentum Wealth, predicted that 2016 would be the year for smart investors looking to capitalise on low prices to take another look at the Perth market.
“The smartest investors buy counter-cyclically. The smartest investors in Sydney and Melbourne were the ones who bought three or four years ago before the market took a big run up, and the same will be for Perth – the smart investors will be buying in the next 12 months, that’s the time to be buying," he said.