Investing interstate: what you need to know if you're investing in Perth

As Sydney and Melbourne’s property markets have boomed in recent years, Perth has faced a period of downturn. However, consecutive months of growth in early 2020 signalled the start of a recovery phase for WA, with the market continuing to show improvements following the easing of lockdown restrictions. With affordability high and low rental stock levels placing upwards pressure on yields, there is now a unique opportunity for investors to capitalise on this combination of conditions.

For interstate investor looking to enter the Perth market, there are several key differences in purchase processes and local market behaviour that buyers need to be aware of.

So, what do you need to know before investing in Perth?

Be aware of differences in sales contracts

It’s important for interstate investors to be aware of any local variances in the legal requirements involved in the property purchase process. Documents such as sales contracts and strata disclosures often differ between states, so it’s vital to understand these differences and what they mean for you as a buyer before entering into a purchase contract.

In Western Australia, a large percentage of properties are sold via private treaty, and unlike in Sydney or Melbourne, these contracts are often prepared by real estate agents rather than conveyancers. This gives buyer’s agents a unique opportunity to negotiate not only the purchase price, but also the terms of the property contract, often allowing them to achieve cost savings for their buyer throughout the purchase process.

Beyond the paperwork differences, costs such as stamp duty, land taxes and transfer fees will also vary between locations. It’s important to make sure you research these costs and factor them into your budget when planning your investment to avoid nasty surprises.

Focus your research

Interstate investors will likely be aware of the general state of the Perth market and will be familiar with the broader opportunities on offer in terms of the market’s affordability. However, it is important that potential investors understand the market at a more granular level before investing. The performance of the Perth market, like every market, differs considerably between suburbs and locations due to different levels of oncoming supply, buyer demand and demographic shifts within individual areas. Even within this, there can be significant differences in the growth potential of individual streets and properties. Whilst a suburb might look great from a distance in terms of location and nearby infrastructure, there are a number of additional factors that can influence a property’s value, many of which are difficult to identify if you don’t have your ear to the ground. High crime levels, flight paths and proximity to busy roads can all negatively impact the value of a property, and these factors can be hard to identify if you don’t have a strong understanding of the suburb you are interested in.

Online tools can prove valuable resources for interstate investors who are conducting research remotely as they allow investors to easily obtain data like days on market, vacancy rate and rental yield. If you don’t have a chance to visit individual suburbs and properties yourself, you may need to consider engaging someone who is familiar with the local market to carry out this due diligence on your behalf.

Get to grips with local planning policies

Planning frameworks and policies can play an important role in determining the potential value of an investment property and they hold particular importance if you plan on developing your investment. These frameworks and policies differ between states, making local knowledge crucial for interstate investors. On top of State-wide planning frameworks, local government areas in WA have their own town planning schemes, as well as council-specific building policies and regulations. As an interstate investor, particularly if you are seeking a property for development, it’s vital that you familiarise yourself with the zoning of your prospective property, as well as any additional council policies that apply to the asset. The last thing you want is to purchase a property that doesn’t fit your development criteria and be left with an underperforming asset.

While these planning policies can seem like a minefield for property investors, this complexity also offers unique opportunities to buyers seeking an asset for their portfolio that they can develop.

Recent market conditions in Perth have offered some great opportunities for interstate investors who have employed a develop-to-hold strategy. Perth’s affordability allows investors to access high-quality sites in closer proximity to the CBD than what is typically available in other markets. Improving rental and growth conditions will result in these buyers completing their developments in a stronger market, meaning they can benefit from higher rents (or sales prices) upon completion as well as manufactured equity.

How Momentum Wealth’s buyer’s agents can help

With Perth’s market offering affordability and opportunity, it is a good time for interstate investors to consider broadening their investment portfolio. However, interstate investors face the challenge of not having the local knowledge to make informed investment decisions or the experience needed to navigate negotiations as the market heats up.

Momentum Wealth’s buyer’s agents are local area experts who consistently monitor the Perth market for new property listings, as well as keeping abreast of policy or market changes that could impact the long-term appeal of specific suburbs or locations. In addition to ‘insider’ knowledge of the local property market, our buyer’s agents have an in-depth understanding of investment policies, extensive experience in property negotiations and an established network of real estate professionals within Western Australia, which can prove an invaluable resource for interstate investors in their property search and purchase.

If you are looking to invest in Perth property and would like to speak to our buyer’s agents about potential opportunities, visit the Momentum Wealth website to organise an obligation-free consultation.

Share