Growth drivers in this area will guarantee increasingly strong returns for investors.
Blogger: Shane Kempton, CEO, Professionals Real Estate Group
The latest REIWA figures for the September 2015 quarter reveal that the Perth property market is still undergoing a market correction, with the median house price falling by 5.9 per cent over the past year to $522,133.
This correction in property values is expected to result in greater activity by investors over the coming year as they understand that Perth house prices will rebound once confidence is restored to the market.
In particular, Perth coastal suburbs that have a median house price below $500,000 should experience increased sales activity as a result of renewed interest from investors.
There are a number of mid-priced coastal suburbs that offer excellent value for money, and these include Yanchep ($435,000) to the north and Rockingham ($465,000) to the south.
Both of these suburbs are primed for future capital growth due to their coastal location and the surging population in these areas, which will eventually put a premium on coastal homes.
For example, Rockingham will benefit from the huge number of new homes being built in Baldivis in a similar way coastal suburbs in the north of Perth like Hillarys benefited from the new estates that were constructed east of Wanneroo Road over the past 30 years.
Once coastal land becomes scarcer, land prices in these areas tend to rise above the market average as it occurred in Hillarys, and will soon occur in areas like Rockingham and Yanchep.
Property buyers should consider the following tips if they are considering buying a Perth coastal property over the coming months:
- The walking distance to the beach is now a major price driver for coastal properties, and properties that are within a 10-minute walk to the beach are poised for strong capital growth during the coming decade. So when you are considering buying a property near the beach, you should walk to the beach yourself to check if it's within a 10-minute walk.
- The long growth in property values in prime coastal suburbs such as Cottesloe and Hillarys highlights the importance of social infrastructure like cafes and restaurants when buying a coastal property. Even if a coastal suburb has no cafes or restaurants at the moment, check if there are any future commercial developments planned. This could have a major impact on future property values.
- Try to view the coastal property in the afternoon. Wind conditions can be strong, depending on the location of the property, and this is best appreciated in the afternoon when the sea breeze occurs.
- While all Perth coastal suburbs have enjoyed strong growth rates over the last decade, try to identify coastal suburbs that may be undervalued. This is because house prices between suburbs do not move in a uniform pattern.
- Ocean views can add hundreds of thousands of dollars to the value of a property and you could also lose this amount of money if you lose your views. If you are buying a block of land with ocean views, check out the covenants to determine if they limit homeowners to building two story homes in front of your property and how long these covenants are valid for. You should also consider engaging an architect who can advise you on maximizing your ocean views when designing your new home.
- Because of the lifestyle trends and outdoor entertaining, blocks with a northern outlook are now becoming more popular. This is an issue that you should consider when buying a coastal property because of the growing importance of the sun.
- Older unrenovated homes in lower-priced coastal suburbs such as Rockingham can be purchased at near land value. These offer buyers the opportunity to achieve strong rates of capital growth due to the high land content of these homes as land historically increases in value while buildings depreciate in value.
About the Blogger
Shane Kempton is the inaugural Group CEO of Professionals Real Estate Group which has nearly 300 offices located throughout Australia and New Zealand.
Professionals have been operating in Australia for four decades and provide a wide range of real estate services to consumers.