Western Australia Real Estate | Still Opportunities in Perth Market

House price growth in the Perth real estate market has slowed but select locations will continue to rise and rents are set to increase 15 per cent or more, according to a property investment group. Written by Tracey Joynson for API Magazine, April 2007.

Hegney Property Group executive chairman Gavin Hegney says speculators in the real estate investment industry are being flushed out of the real estate market and the “buy anything” strategy will need to be replaced with careful choices.

“Price growth in the premium property sector in Perth should grow at 10 to 15 per cent whilst low price real estate property is predicted to move very selectively,” he says.

Real estate investors and Perth industry representatives at the launch of the 2007 Hegney Property Outlook Report were told that opportunities included the Scarborough beachfront and Claremont redevelopments, the new Port Coogee marina which will rub off on the nearby suburbs of South Beach, White Gum Valley, Beaconsfield, Spearwood and Munster and the Perth to Burnbury highway, known as the Peel deviation, which will revalue the strip from Halls Head to Port Bouvard.

Also, the planned Alkimos Eglinton real estate development, designed for 55,000 people, 40 km north of Perth will impact on that area while the extension of Marmion Avenue will benefit Yanchep and Two Rocks. Population growth, the resources boom and low unemployment continue in WA and the fundamentals of lack of supply, ongoing demand and growing returns remain – all pointing to continuing real estate Perth property price increases, Hegney says.

But risks include softening commodity prices, the flow-on effect from the drought, rising interest rates, delays to stamp duty reductions, and rising labour costs translating to increase infrastructure costs affecting the viability of some real estate projects which may stall WA’s growth and Perth’s and will impact on the housing market.

However, the long-term outlook for resource-rich states such as WA is strong, Hegney believes, because demand for Perth real estate from India will start to flow after demand from China begins to taper.

New Cycle | Rising Rents Lure Prospective Investors in Real Estate

Written for the Australian Investor Magazine for April 2007 on Page 7. Australian investors plan to plunge back into the residential property market during 2007 tot take advantage of a tightening rental real estate market, a survey suggests.

The number of Australians planning to buy an investment property in the next 12 months took a record 35 per cent leap from 577,000 in the September 2006 quarter to 779,000 in December 2006, the survey conducted by Nielsen Media Research showed.

Real estate investor sentiment in New South Wales and the Australian Capital Territory saw the greatest turnaround, with the number of intending rental real estate investors jumping 80 per cent from 169,000 to 308,000.

Wizard Home Loans chairman Mark Bouris, whose company sponsored research, said increasing rental returns were a major factor in drawing real estate rental investors back to the property market. “Our research indicated that borrowers are responding to and attempting to capitalise on increasing reports of limited supply of rental accommodations and predictions of sharp increases in rental yields,” Bouris said. “The appeal of high returns has helped lure borrowers in real estate property to the property investment market. However, adequate supply of property will be the critical issue affecting the vitality of the market in the next 12 months.”

Bouris said the research suggested 60 per cent of those keen to buy were first-time property investors, while workers in trade and related occupations accounted for almost half of the total increase in would-be investors.

“Australians in professional occupations remain the largest group of intending real estate investors but only just,” Bouris said. “The traditional so-called ‘blue collar workers’ are poised to make ground on the stronghold professional workers once held on property investments.”

“Those in trade and related occupations are capitalising on the skill shortgage and resources boom, and they’re making savvy financial choices and attempting to invest their higher wages into long-term investments such as property,” he said.

Real estate investor demand was up in all the mainland states except for South Australia and the Northern Territory, the survey showed.