WA How much is Perth moving south?

yes, that is what happened Perth tanked and Melb started rise, inner city first then the ripple effect/middle ring.

 

We were trying to work out why Melbourne went up so much at the time.

 

Melb went totally against the trend, Interest rates were on the rise, I honestly have no idea why it boomed other than laws for foreign investors became favourable during this period

It was also very easy to source finance lo doc/no doc, if you had a **** load of equity you just kept buying.

There is a thread on this on SS - 2007 boom. Seems most posting also had no idea why auctions clearances were at around 85%.

All I remember was I was fighting hard to source properties lots of competition, hard to do from Perth

mtr

 

I was in Melbourne for some of it. Auctions in my area were running hot. I was lucky there was only one other serious bidder when I bought. I think a big part of it was that people just suddenly realised that Melbourne prices represented a lot better value for money than Sydney and Perth.

 

Just a question on this Perth downturn, and it's obviously dependant on how much it falls and what the particular property is valued at, but for example from an investors point of view...

I have 2 friends with IPs here in Perth both valued around the 470-500k mark.

Both are wanting to "quickly" try and sell now before Perth hits "rock bottom" and then buy again.

Personally I don't think it's worth selling by the time agents fees are paid and then stamp duty is paid on the re purchase + moving costs, rent etc

Again, dependant on what the market does but how much does it really have to go to make this kind of move worth while?

 

You could be right.
Would you believe there was at least a 3 week time frame where Perth surpassed Sydney's Median House Price.

Now Syd median is at $1M and Perth I think around $540K. How times have changed.

 

Its totally dependent on what they paid for it and the expected profit after all costs including CGT.

The right time to sell would have been mid 2014. If I did not need to sell I would not, especially in current climate, its just a tough gig.

MTR

 

Agreed I don't think it's worth it unless they are able to do something totally different, ie sell a single IP and pick up something subdivisable. Unfortunately most dwellings with development opportunities on them rarely fall into the bargain territory.

 

I reckon they'd be best off getting their hands on any equity, using that to buy when they think the time is right and reap the rewards having 2 properties to hold through the next upswing. Saves a heap in fees too - there's such a high transaction cost to property that churning is rarely a great option.

 

@MTR have you got a link of the 2007 boom thread on SS ? I couldn't find it

 

http://somersoft.com/forums/showthread.php?t=34809&highlight=melbourne+boom

Here it is, as you can see started off in inner city

 

I am thinking of buying an old property in an established area of Perth in the next one year. Rent it out first, then if possible do some simple development a few years later like pulling the house down and building two units, or simply just subdivide if the extra land is big enough. Which are the undervalued areas? Is Spearwood good? What about the lousier areas like Gosnells/Kelmscott?

Perth is big and many agents are telling me different things... I am confused.

 

Good for what exactly?seems to be a bit of overpriced stuff out there. Choose your market and suburbs and see if you can make the numbers work to develop somthing catering to your target market and budget. If move on.

And also dont pay too much attention to those agents. They're confusing you because they have a product to sell you.

 

Depends on your budget. Sub $500k dev blocks don't have enough margin in them at the moment though it'll get better in the next 2 or 3 quarters. I personally think, a 3-unit development is the way to go.

 

Hello mate

I saw there's a number of 1000sqm land with an old house in Gosnells area, selling pretty reasonable at less than $500,000 sometimes. That could be a "cheap" start. I understand this is not a very good area. But I feel it should improve overtime considering it is not too far from the city and the property prices here are still not too high. Moreover, if the property cost is not too high, the risks would be lower too.

 

It won't be cheap if it has clay. If you decide to buy in this area would get soil tested

 

As MTR said, south of Cannington there is a lot of clay soil which adds considerable costs to earthworks. Get yourself familiarized with zoning codes in WA. 1000m2 is nothing if it has a R17.5 coding. For $500k I would probably start looking at Belmont/Rivervale areas. If you wait patiently you'll be able to pick-up a livable-dump for $550 to $600k with development potential.

If you are into cheapies, look at Midland and Armadale. They have a bad rep but never let that stop you if it fits into your strategy. They are like satellite CBDs and have good growth drivers plus the stigma which will take time to wear off. Can pickup a 4-unit site < $400k close to the train station in Armadale. Again do your research.

 

Some good advice from the others above, don't forget to also factor in the fact that most likely there will be significant holding costs/negative income on blocks like these where you want a large block with an older house. The rent on the older house can be quite low.

 

Yes, I do remember that! I was looking to invest at the time and was shocked to find Perth was higher that Sydney. Melbourne was a bargain at the time. I know there was a lot of OO and investor activity when I was looking: crowds at home opens, fierce bidding at auctions, prices going up, up, up. I didn't really last long though. There was years of flat growth after that.

 

Thanks so much for the replies. I did consider Armadale before. But some people advised me against it, saying it is not a good area. I have personally been there a few times and felt that it is a mini town by itself. It has almost everything you need from the CBD... It is not near, but not terribly far from the CBD anyway. And yes, buying close to the train station will make the property at least more desirable when the market (hopefully) improve.

There are still many properties that are pretty sizable there - potential sub division sites. This is another bonus.