While the 2019 calendar year was lacklustre for the Perth property market, Momentum Wealth believes that the Western Australia capital is primed to present some lucrative opportunities for buyers in the beginning of this new decade.
After recording a significant decline in stock for sale and rent through 2019 and ultimately seeing higher levels of buyer competition in prime suburbs in the second half of the year,is expected to witness further tightening in stock levels due to low levels of supply coming on stream.
However, Momentum Wealth’s research adviser Shaun Strickland said that careful property selection remains critical for those looking to leverage market improvements.
Some areas in Perth are still facing days on market of 120 days and above, and so buyers need to be smart and target tightly held suburbs.
“Buyers searching for suburbs with strong growth prospects should look towards areas that are tightly held, where there are few property transactions occurring due to limited supply coming on stream,” Mr Strickland highlighted.
To find the best locations for property investments, he encouraged investors to seek markets surrounding popular school zones, those near upcoming infrastructure and “aspirational suburbs”.
According to Mr Strickland, areas surrounding popular school zones are likely to benefit from limited supply.
These suburbs generally experience high levels of demand from owner-occupiers, this offering greater stability during market downturns.
Further, the lower density zoning surrounding these areas also tends to favour family-style housing on larger lots, providing fewer opportunities for new developments and competing stock.
“Bateman and Carine recorded annual house price increases of 2.4 per cent and 5.3 per cent, respectively, in the September 2019 quarter, despite house prices being down -2.9 per cent collectively in the Perth market,” he said.
Buyers are also advised to consider the potential impact of future growth drivers, such as impending infrastructure upgrades, when choosing a location for property investment.
Infrastructure upgrades such as new transport links can provide an important catalyst for capital growth due to the increased accessibility and amenity they bring to a suburb, both of which can help drive higher levels of demand from buyers and renters, according to Mr Strickland.
A number of infrastructure projects will be established in Perth over the next five years as part of the local government’s METRONET project, which will see the creation of up to 18 new stations across the Perth metropolitan region.
The first stage of the project includes the development of three new stations under the $1.86 billion Forrestfield-Airport Link.
Previously overlooked suburbs, like Forrestfield, are set to benefit from these projects.
“For a suburb like Forrestfield which has always been on the fringe of the Perth greater region, having a direct transport route between Perth’s airport and the CBD could be a major drawcard for city and FIFO workers, in turn promoting a new wave of buyer demand,” Mr Strickland said.
“Investors who enter these suburbs at the right time have the opportunity to leverage the relative affordability of these areas before buyer competition starts to place upwards pressure on property values.”
Apart from upcoming infrastructure, investors are also advised to be critical about the type of property that they will buy for wealth creation.
“With the new zonings that often accompany these projects, it’s important that buyers remain prudent in their choice of properties and avoid property types facing a significant influx of future supply which could compromise their own property’s performance,” he said.
Finally, Mr Strickland encouraged investors to take advantage of Perth’s relative affordability by looking towards “bridesmaid suburbs”, which could be next in line to areas that are already experiencing growth.
These “aspirational suburbs” typically offer similar demand drivers and high-quality investment opportunities, just at a lower price point.
According to the property expert: “We saw this during the last market upturn, with suburbs such as manning experiencing high levels of buyer demand following significant price increases in areas like South Perth, with those who timed their entry into this suburb well benefitting significantly from ensuing price growth.”and
When looking for opportunities in “bridesmaid suburbs”, Mr Strickland reminded investors to ensure that these suburbs still have the right growth principles in place.
After all, proximity to growth areas does not necessarily guarantee significant growth in the future.
“These areas can present great opportunities for the astute investor, but not all properties within them are going to be good investments, so buyers need to ensure they are still doing their research and steering clear of poor-performing pockets or red flags that could hinder their portfolio’s long-term growth,” he concluded.