WA Curious about the Perth market - Scarborough/Bayswater

Hi everyone my sister is moving to Perth for approximately 2-3 years and my father is contemplating perhaps buying a property over there (rather than her rent off someone else). Total rent expenses over the 3 years would be between 45000 - 60000. We're only really familiar with Melbourne and currently have no idea on the Perth market. From what I do know generally Perth has been in a downturn for nearly a decade and showing little signs of recovery? The suburbs in particular we're interested in are Scarborough, Bayswater and adjacent suburbs. Budget probably up to 400k

The major factor is she will renting over there off someone for 3 years regardless. If these suburbs aren't at a doomsday point in the cycle and have seen their worst, it's probably better to buy over renting. If it's not an apartment we can always add equity via diy renovations etc, buy smart initially hopefully break even worst case.

I guess we're just after some vague advice on the market over there (particularly those suburbs). Given the current state of the market, and the fact she's going to be renting there for 3 years. Is buying there something you'd consider in this situation, or would you feel it's better to steer clear and wait regarding Perth? I know if this was a 500k home in Pakenham I'd be telling them to steer clear and wait!

 

What's the goal here? To financially be ahead? It really seems like a punt to me.

Personally I don't think 3 years is renting is automatically a worse financial option than buying something to live in. Plus there would be flexibility in renting and other non-financial benefits etc.

 

Stay away from apartments and 4-unit or more villa/townhouses complexes unless it's an absolute bargain. Scarborough won't get you anything in that price range. Bayswater is a good bet but need to be patient to pick up something under $400k.

Houses and strata free 2-unit subdivisions are the way to go.

98 Garratt Road, Bayswater, WA 6053
52 Grand Promenade, Bayswater, WA 6053

 

Can I ask why these two suburbs made the short list? IMO they are VERY different areas...
As @JohnPropChat has said 400k wont get you anything in Scarborough apart from villa or apt.
Bayswater is no where near the coast so I guess it depends on her lifestyle, personally if I was going to live in Perth for 3 years I would want to be close to the beach as it is Perths best feature! Our gorgeous beaches and sunsets over the ocean!
Would your sister be open to having housemates? If so, she could live by the beach and pay as little as $150pw on rent with an amazing lifestyle in a blue chip suburb. Also means bills are split and no rates/insurance etc
I think this is the best way to go considering your family are not familiar with Perth and it is only for 3 years, very easy to buy poorly and lose significant $$$

 

Bayswater has its appeal not just from a living perspective but potential for good growth.

 

Is she open to a sharing a house with others? I rented for 11 years in multiple households in NZ and Australia spending between $80-$200 per week.
In Perth currently, you could secure a room in a 3-4 bed house for $140-$180 per week inclusive of all bills. This is quite cost effective especially over only a 2-3 year period.

 

Wasnt saying Bayswater isnt unappealing, I agree it has good growth potential. It comes down to the type of person she is and what she enjoys doing in her spare time.

 

From it's base of widely unappealing and being R25 for the past two decades.....!

 

That's all changing rapidly. New train station and WAPC wanting even more density than what was recently put forward by the council.

When you say widely unappealing, is this another one of your "my personal preference" comments

 

Hard to go wrong with the Bayswater pocket around Meltham train station, area's bordering on Bedford / Inglewood and close to Mount Lawley.

 

Indeed. Bayswater to the East of Tonkin Highway might as well be Ashfield/Bassendean.

There is a structure plan in place for the Meltham station area. The Baywaster station structure plan is in the works to align with the $120million something upgrades.

 

Purely talking past-tense.

 

I'd second everything John is saying, and you're bang on - it costs more to rent in Perth than buy. As for "little indicators of recovery", i have been a long running bull of the Perth market but when supply is shrinking for both rentals and sales, rates keep falling, it costs more to rent than buy, resources recovering, the government announcing its spending plan for the billion dollar gst boost.. it really blows my mind that Perth hasn't turned already. There is enough headroom in the rental yield/buying price ratio for a 20% price lift in many areas, particularly when you factor in another rate cut.

I used to have a 2 bed villa in scarborough. Bought in 2012 for 375k, sold in 2014 for 450k. Villas are not really being built anymore in the area.. its all about mid-rise apartments now so villas with a garage and a little outdoor space are becoming more rare (by percentage of stock in the area). Moving forward i think they will make great low-maintenance investments (provided strata is reasonable).

A year ago you would have been able to pick up what i used to have for high 3's, now its looking like they're back to low 4's. Market definitely moving in Scarborough. Can't speak for the other areas being discussed as i don't know them as well.

 

Rent for 3 years is a fixed price.

Buy and sell after 3 years?
3 years rates $4500+
3 years water rates $3000
3 years building insurance $1500
any maintenance costs
stamp duty and other buying costs
selling costs
bank interest on $400K?? at 3 to 4 % $36k to $48k

Not many are predicting much capital growth in Pert in near future

It might be easier to rent/lease