Finance advice
Rory O'Rourke

Perth records the highest rental yield growth rate

By Rory O'Rourke

PerthPerth, TAS Perth, WA is rapidly becoming a magnet for property investors throughout Australia because of surging rental yields. The latest figures produced by Australian Property Monitors for the March 2013 quarter show that rental yields for apartments in Perth surged by 11.4% which is the largest growth rate recorded by any capital city in Australia.

Blogger: Rory O'Rourke, O’Rourke Realty Investments

Overall, the gross rental yield for an apartment in Perth is now 5.82% which is much higher than major capital cites in the East Coast such as Melbourne (4.83%) and Sydney (5.14%).

Apartments are traditionally favoured by investors as an asset class because they are low maintenance and the rising demand for apartments during 2013 in Perth has seen the ‘sell out’ of new apartment developments shortly after being launched. 

Competitive property prices combined with rising rents are driving up rental yields in Perth. In addition, there is a shortage of homes both for rent due to an under supply of new properties to meet the demand generated by our growing population.

As we enter the start of a new financial year, many new first time investors will enter the Perth property market to take advantage of these surging rental returns as well as the prospect of rising capital growth rates.

However, first time investors need to undertake careful research before making a decision to purchase because your first investment property can be the key to building a successful property portfolio,” he said.

A new trend in the Perth property market is that more people are buying investment properties prior to buying their own home.  A person can own multiple investment properties prior to buying their own home and still get the first home buyers grant scheme, as long as they did not live in the homes.

There are important tax advantages as all the costs including all the interest is tax deductible.  Our biggest expense is income tax our second biggest expense is indirect taxes.

There is a simple choice – we can pay 46 ½% income tax or pay 5% interest.  The interest is tax deductible (if borrowed for investment purposes) while income tax never will be. Investors can benefit from Capital Growth – because of demand Perth is expected to go through the roof.  Investors should also consider that there are huge advantages in having multiple properties.

Mr O’Rourke added that many first time investors never buy more than one investment property because they make simple mistakes which include:

1. Buying an investment property they would like to live in without thoroughly looking at capital growth and rental return potential.

2. Deciding to buy an investment property close to their owner occupier home rather than looking at investment opportunities throughout WA or indeed Australia.

3. Selecting a property based upon advice of friends or family rather than seeking independent information.

4. Buying an older property which can drain their finances through maintenance costs.

5. Not undertaking a full assessment of the true cost of buying and holding the property. For example, if the property an apartment, there are additional cost issues compared to buying a stand alone house such as strata fees.

6. Selecting the wrong home loan i.e. principal and interest rather than interest only which will help increase cash flow.

7. Buying a property in a location which is not attractive to tenants i.e. not close to amenities such as shops or transport.

8. Purchasing a property in an area where there is an oversupply of properties meaning rents will be low and capital growth rates limited.

9. Trying to select the tenant themselves rather than using the services of a number of reliable property management companies.

10. Buying an investment property with the view to a quick return rather than viewing it as a long term investment and stepping ladder to purchasing a portfolio of properties that will fund their retirement.

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About the Blogger

Rory O'Rourke

Rory O'Rourke

Rory O’Rourke is the principal and licensee of O’Rourke Realty Investments in Perth and has been in the property industry for over 40 years.

Rory is a former Vice President of the International Real Estate Federation (FIABCI) Australian Chapter and was inducted into the International Who’s Who of Professionals for 2009/2010.

He has authored three bestselling books Born Free Taxed to Death, I sold 22 homes in one day and It’s Time… the Republic of Australia.

These books can be accessed at http://www.orourke.com.au/books.html

Email:
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podcast

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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
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Should a real estate title be in one person’s name only?

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A property investment plan years in the making
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  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
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  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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