Watch the below video for Jarrad Mahon’s latest insights into Perth’s sale & rental market, plus the investment opportunities to check out. For those that would prefer to read, see the transcription below.
The graphs spoken about
Source: REIWA.com
See the transcription here
Hi There!
Jarrad Mahon from Investors Edge Real Estate bringing you my latest Perth Property Market Update for October. Where I take you through what’s happening in the Sale Market, the Rental Market and Investment Options to check out at this time.
Sale Market Update
Now, what’s happening with the Sale Market is the number of properties on average was sitting at 10,400 for sale over August and September. It has since increased by about 5% with lots of extra properties coming on the market in October so we’re now at 10,800. And it’s typical to see the number of properties increase as seller’s want to take advantage of what’s usually a good selling time of the year.
However, the number of properties being sold every week isn’t actually increasing over the last four weeks. It’s staying about the same. So, there’s lots of extra choice out there for buyers at the moment.
There’s lots of extra competition between sellers and if you are gonna be sold before Christmas, your property really needs to be presented well, marketed well and use an agent that’s gonna give you feedback from the market and negotiate the best price, so you can make decisions.
Now, you really wanna be sold over the next four to five weeks coz come December. Things are going to get very quiet, you property will then have to come off the market and buyers don’t usually return until February.
Now, what we’re seeing in the number of properties heading up month per month is that we’re now edging our way back closer towards a neutral market. And I expect that we probably get to that 12,000 properties for sale where we normally classified as a neutral market in the first quarter of next year.
Rental Market Update
What’s happening in the rental side is that the rental market is stabilizing and we’re still at a 4% rental vacancy rate which is holding tight. And the median rent is sitting at $450 per week unchanged for the last four months and with the number of properties for rent is also unchanged, sitting in at just below 6,000 properties for rent on the market. So, that’s good news for landlords.
I expect that rental prices are not going to drop further in most suburbs. And what we’re finding in the market at the moment is there’s generally been about 10% drop in the rental price over the last year. So expect that when your property is coming up for re-lease.
And it is still a competitive market out there. So make sure that you’re choosing a property manager that’s got a leasing manager that’s really dedicated to finding that tenant that can do out of hours and weekend viewings and they really need to go to the complete effort that you would for selling a house, using professional photography and those negotiation skills to get you the best rental price.
Investment Options
What’s happening with investment options is that it’s good stage of the market for house and land packages. I expect that the outer areas is where the majority of the growth’s gonna be over the next year.
And with those packages, I’ve been doing a bit of work behind the scenes and we’re about to come out with pretty creative housing designs which we’re calling dual income houses. And what that involves is under the one roof, we’re managing to design a property that has a 2 bedroom x 1 bathroom and a 3 bedroom x 1 bathroom side by side. So two rentable spaces under the one roof, which boost that rental return from what is typically 4 ½ to 5 % or to up around 6 ½%. So it’s gonna be positive cash flow on the property.
There are so many benefits of positive cash flow, it means that you’re not getting held back on your serviceability. I’d rather have cash in my pocket each week rather than negative. And the other major benefit is as interest rates do come back up whenever they do, you gonna be insulated against it. So, email me if you’re interested to find out some more about these duel income designs.
I’m pretty excited about it myself and looking at using that kind of strategy for my own portfolio.
If we are looking at an Off the Plan apartment purchase, you really wanna be thinking through the whole time that it’s gonna take to build such a complex. And the build time’s typically 12 to 14 months, so you really need to be buying in areas that keep their popularity in demand other than time. And Off the Plan can be a bit more risky.
Off the Plan properties are really suited to a purchase using a self-managed super fund. And if you are looking at that kind of purchase, let me know and I can help you choose your areas. I’d certainly be more focused on the lifestyle locations and areas that are gonna stay in demand.
With established areas, if you’re looking to do a development sometime over the next couple of years and you want a property that’s gonna have subdivision potential. I’d be looking at the proposed rezoning areas of Marangaroo to the North, Forrestfield to the East, and Coolbellup down South.
All these areas have got new planning schemes proposed and at last check they are about 18 months before I’d expect them to get through, you can touch base with each council for the latest on each of those timings.
If you’re looking at areas that are already sub dividable, you can look in for a little duplex project or small apartment project. I really like Lynwood to the Southeast. I would check out Girrawheen to the North, it’s a bit of a shit box area but there are still properties with some reasonable returns. And I’d also take a look at Bayswater to the inner East, that’s a great little suburb but you do have to be selective in there.
Make sure that you’re getting 15% plus return if you’re just doing a duplex and you really want 25% plus if you’re doing a small apartment complex. Happy to advise you and help you work through your numbers and make sure things stack up before you buy, don’t contact me afterwards. It’s too late then.
So, that’s really a good snapshot of where we’re at in the Perth Market. If you want some advice specific to your situation, feel free to send me an email or give us a call and I’m just happy to help and I’ll catch you in the next month.
