In my latest Perth Property Market Update for April, I give you my juicy insights into the Perth rental and sale market as well as the opportunities to take advantage in this market. Watch the video now or if you prefer to read see the transcription below. I’d love to get your feedback or questions, so post it below.
Here are the graphs I refer to
Read the transcription here
G’day! Jarrad Mahon here from Investors Edge bringing you my April Perth Property Update. Got a lot of juicy things to give you insights into. I’m gonna take you through the Sale Market, Opportunities in this Market and an update on the Rental Market so stay with us.
Perth Sale Market
So in the Sale Market, we’ve had a fair bit change since I came to you in February and we’re back up to 9500 properties for sale and that’s on par with the maximum level that we had back in November, December last year.
So, I’m just really keeping an eye on that at the moment because we were trending back down to a tighter market and now we’re back up at our maximum level, still in a “Sellers” market, nothing to worry about but very notable.
After looking a lot deeper it’s not just houses or units or land supply that is increasing, they’re all increasing uniformly across the board. So not just one property type.
The reason I believe underlying that is that as turnover and growth is rippling outwards into the 15-40km radius of Perth there’s a lot of pent-up demand there from people that couldn’t sell, couldn’t get there prices or saw neighbors not sell or not get their price and then decided not to sell themselves.
So it’s natural that as we get demand and more houses selling in those outer regions, the people that did want to sell in all of the years past are now seeing others in the street get sold and deciding to come on to the market. So, we’ve got a lot more properties coming on the market and it’s probably going take a bit of time to stabilize.
Now the reason I know that it’s extra properties coming to the market that is increasing the total number for sale, is when we look down here at the number of sold properties, we are still at a record high levels that we experienced in 2013.
The number of sales per week hasn’t dropped that’s ticking along at 970 -1000 sales per week. So it’s really just extra properties coming on and those sellers that have been waiting for a while are now coming on to sell.
Perth Investment Opportunities
And where are the opportunities in this market? Well, If I was looking to do a house and land package to build, there’s a good buying opportunities in the outer estates.
The ones that have got infrastructure changes happening to. My favorite of the outer estates is up in Butler, at Eden beach, the coastal suburb there. Butler’s getting a new train station over the next six to nine months. They have got a Woolworths and few other commercial things going in so I’m much in favour of Butler over other popular areas such as Harrisdale and Baldivis.
I’ve looked at those two but I prefer Butler at the moment. If I was looking to do a development site… I’ve been active in the market looking to buy development site over the last month myself, had four offers in on properties and missed out on the first three and picked up the fourth. I’ve purchased in Thornlie which is just on the fifteen kilometer radius of Perth, there is still some good value buying in there.
If looking to do a development to retain the front house and subdivide at the rear, don’t settle for anything less than a 15% total return.
For your development sites if you’re looking to do smaller apartment group, don’t settle for anything less than 25% total return on investment there, these are the kind of numbers that are possible out there.
To improve that return, look for areas that are getting re-zoned and or undergoing a density policy change. The City of Gosnells has got an interesting R30 zoning corner lot density bonus going through for areas within 800 meters of suburb town centres, so take a look at that one. And that’s where I’d start if I was looking to do a development strategy.
Perth Rental Market
So, when I come across to the rental market, what is a little bit worrying is the vacancy rate in our stats.
Well it’s really just coming to reflect what we’ve known for the last three or four months. The vacancy rate is now up at 3.8%, which is a fair increase on our levels that we used to be at the start of last year.
We started last year at 1.9% to 2% and we’ve almost doubled that. What I’m seeing that is that it is taking a good 2-3 weeks to find a quality tenant on properties so make sure you give yourself that lead time.
I’m watching the stats to see if we stabilize or if the vacancy rate keeps shooting through. Now suburbs are very different so you must look at it case for case.
With the Perth CBD, East Perth and West Perth their property market is heading back to a neutral market and pulling back in prices and the rental market is also pulling back.
The CBD area has been really affected by the slowdown in the mining boom. So, in there you can imagine the vacancy rate would be a lot higher. We’re seeing $50-100 per week adjustments on a typical property at $500 per week pulling back $50 on average and the upper end executive market’s pulling back hundreds of dollars per week.
Furnished rentals are not as much in demand because people aren’t bringing their executives in and putting them up on short term basis anymore as much they used to.
The number for rent has started to plateau at around 5000 properties so I expect the vacancy rate to stabilize as well. I’ll be keeping a good close eye on that over the next months.
Our median rent has started to stabilize too at a $460 per week which is a lot more sustainable and good news for tenants. We’ve actually had a record number of break leases this month.
It’s been keeping my leasing department really busy and the main reason that tenants are reporting for their breaking lease is purchasing and buying in the market themselves. So as the outer suburbs become more popular to purchase in, that’s where the affordable spots are for them.
So, that’s my overall update, feel free to send me through any questions and give me a buzz to chat on your specific situation, I really love bringing this to you and I’ll catch you next time.