State of Markets - WA Feburary 2015
Proposed cuts to interest rates could change Western Australia’s fortunes in 2015
According to CoreLogic RP Data, in the 12 months leading up to December property values in Perth grew by 2.1 per cent.
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This puts Western Australia some way behind other state capitals such as Melbourne at 7.6 per cent and Sydney at 12.4 per cent.
However, with a growth rate of 2.8 per cent, Perth outperformed all other capital cities in the December quarter.
According to the data house, the median price for a dwelling in Perth now stands at $525,000, just below the capital city average of $575,000.
A recent report from the REIWA identified Eden Hill as Perth’s top performer, with a growth rate of 20.3 per cent. This north-of-the-river suburb in the Town of Bassendean has a median house price of $507,500.
Eden Hill was followed closely by Wannanup, where the growth rate is estimated at 19.8 per cent, with a median dwelling price of $530,000.
A national real estate group says that some areas of the Western Australia market would be stimulated if interest rates were lowered in 2015.
Angus Raine, CEO of Raine & Horne, explains that with the Perth market so heavily tied to the commodities sector, the Reserve Bank’s decisions throughout 2015 would underpin real estate activity in the city.
Raine & Horne reports that the city put in a mixed performance for investors in 2014, and this would likely continue into 2015.
According to Paul Curran, principal of Raine & Horne Rockingham Beach, suburbs in the south west enjoyed a healthy 2014, with Baldivis the star, thanks to the $116 million redevelopment of the Stockland Baldivis Shopping Centre. He reports that since the centre reopened recently, about 25 per cent of real estate sales in the City of Rockingham have occurred in Baldivis.
Mr Curran says that interest rate cuts would ultimately stimulate Perth’s south-western suburbs.
He identifies Rockingham, Safety Bay, Baldivis and Warnbro – where it’s possible to secure a four‑bedroom, two-bathroom house for between $380,000 and $450,000 – as prime locations.
In focus
If you are after an affordable investment in a great location, look to the suburb of Saint James. Only six kilometres south of Perth CBD, close to Bentley Plaza shopping centre and Curtin University, and five minutes to Welshpool train station, it is little wonder that this area is popular with professionals and students alike.
As Saint James moves to shake off echoes of a less attractive reputation, its location and affordability have translated to increased competition and development as both investors and families seek reasonably priced homes within 20 minutes of the CBD. There is also optimism that the coming changes to Perth’s local government areas will accelerate the gentrification of the area.
The housing stock boasts a wide variety, from 1920s character homes to 1950s brick-and-tile houses, with a smattering of villas, town houses and units. It’s one of those suburbs with property to suit every taste.
Saint James’ median house price of $567,500 is slightly above the figure for the wider Perth metropolitan area. However, it is low alongside comparable areas, making it a pocket of affordability in a great location.
Over the past five years, Saint James has experienced steady growth, outperforming many of its neighbouring suburbs.
This trend can be partially attributed to its convenient location, but also to the new developments springing up. While large blocks are giving way to groups of two or three villas, so far, Saint James is not experiencing the oversupply issues evident in nearby Belmont and Cloverdale.
Investors have their choice of strategy in Saint James. There are still subdivisible properties available, though their increasing scarcity means they command a higher price. An investor would need a large budget if they planned to develop this type of property straightaway.
Investors may also be interested in purchasing an older home as a buy-and-hold investment, where a cosmetic renovation could lift the rental return while they wait for the natural capital growth in the area.
Investors with a focus on rental yield will find suitable opportunities in Saint James. Data from the REIWA shows that almost half of the population is renting.As of the September 2014 quarter, Saint James’ rent was equal to the Perth metropolitan area average of $450 per week. A safe investor could also find one of the new or existing villas at an affordable price to maximise their yield.
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