The Perth Property market has officially bottomed out and showing green shoots of growth, so Property Investors have already started asking me, “Where should I buy?”
After many hours research I have put together my Top 3 Safest Perth Suburbs to Buy in 2018, for strong rentability and growth potential over the next 12-24 months.
In the past many property investors blindly chased capital growth focusing on the potential upsides, without giving proper thought to how the suburb was likely to hold up if the market crashed. They also didn’t spend enough time looking at the properties rentability to see how they are going to find quality tenants quickly while achieving a price they can afford to hold the property for the long term.
After seeing many such investors have to sell their rental property over the last 3 years, I have put together the following criteria to ensure a safe investment that has the best chance of performing.
Safest Price Point
Firstly, I only look at suburbs that are priced within 20% of the Perth median house price of $512,000 (Median price between $425,000 and $615,000) as longer term I have seen these to make for a safer investment. This is because the average family is always able to afford to buy and rent there, even in down markets.
If you look at the top and bottom ends of the market, both had the largest price corrections over the last 3 years. The top end has started to bounce back, but it pays to think ahead to be more insulated from the next market downturn (Whenever that is).
I have looked at longer term prediction reports, shorter term trends and local knowledge to ensure a better chance of capital growth. I am also only looking at houses because the Unit market is 12-18 months behind the housing market and has further to fall before it reaches its bottom.
I have then looked at the rentability to choose suburbs that have a relatively low rental vacancy rate of less than 4% (compared to 5.6% Perth average), so that we are readily able to find tenants and a rental yield at or above 4%, so that it doesn’t cost you too much to hold onto it!
Finally, I have chosen suburbs to suit different types of investing strategies from the more passive simply buy and hold, to buying a property with future re-zoning potential and finally for the more active investor, having current development and renovation potential.
So here are my Top 3 Safest Suburbs, in no particular order…
Maida Vale– Median Price $492,500
- Located 22km South East of Perth in the foothills
- Affordable Family Friendly area with flow on benefits from Forrestfield train station and re-zoning
- Suitable for: Straight forward buy and hold, some development and renovation potential
- Rental Market: 3.97% Rental Yield, 3% Vacancy Rate
- Past Growth Rates: -5.3% 1 year, 2.0% 5 year AAGR, 0.9% 10 year AAGR.
Bibra Lake- Median Price $527,500
- Located 20km South from Perth
- Affordable family friendly area with good access to Cockburn Central and Fremantle, which will go through renewal once new zoning comes through.
- Suitable for: Properties with proposed Rezoning to higher density
- Rental Market: 4.08% Rental Yield, 3.8% Vacancy Rate
- Past Growth Rates: -1.7% 1 year, 2.3% 5 year AAGR, 1.2% 10 year AAGR.
Craigie- Median Price $437,500
- Located 23km North of Perth
- Affordable, close to the coast, and relatively good value when surrounded by higher priced areas.
- Suitable for: Properties with Renovation and Development potential
- Rental Market: 4.1% Rental Yield, 4.0% Vacancy Rate
- Past Growth Rates: -4.9% 1 year, 0.6% 5 year AAGR, 1.3% 10 year AAGR.
Get Our Advice Before You Buy Mistakes!
The best time to get our advice on Suburb selection and rentability is before you buy and commit to making any costly mistakes.
Sources: REIWA, Boomapp.com.au, Heron Todd White, Property Prediction Pty Ltd. We provide property services across WA including Perth, up in Joondalup, and more.