WA How much is Perth moving south?

I have IP's located in the Midland & Cannington satellite CBD's. They have over tripled in both Valuation and Rental Yields in the past 15 years.

I believe we have attained that growth because early on in our investment journey we decided to target / purchase in areas that had recently been approved for or were in the planning stages for gentrification.

We looked for the following 4 flag sectors injecting money. -

Government, Commercial, Retail & Private sectors

We discovered this ultimately uplifted & beautified the area resulting in people's attraction thus moving in and creating demand.

We have found this to work very well if you are looking for short to medium term capital growth so as to leverage against and build your portfolio faster.

Typically these are some of the signs we looked for where sectors were injecting money -

A/ Local/State/Federal Government. ie Major arterial roads, Govt Depts locating to area, Street Scaping, New Public Transport, Recreational facilities, Hospitals/Medical facilities, Suburb Redevelopment Authorities being formed. etc

B/ Big Multi National Retail & Commercial type companies. ie Major Shopping Centres, McDonalds Hungry Jacks, KFC, Bunnings, Harvey Normans, Good Guys, etc. These companies spend $Millions on market research before going into and setting up shop in an area. If there was no current or immediate future demand for their products and services they would not be moving in, so leverage off the back of their research.

Sources for information as part of your due diligence - You can check out all the federal/state/local government planning & development websites at this one convenient link (http://www.oultwood.com/localgov/cou.../australia.php).

Other sources I use to gather info are from all the various big multi-national company websites, local newspapers, community news, local businesses, and people in the area.....general networking etc.

C/ Private People/Investors. ie Owner occupiers and Investors bowling over old houses then rebuilding new modern homes and redeveloping town houses / villas.

Get out and about. Jump in your car and drive around the area. Better still is once you're in your prospective area hit the streets by foot. You will see so much more on foot than by driving.

I hope this provides some food for thought.

 

Hi Rixter

Good points.
However we now have a declining market in Perth it wont matter where you buy because there is too much stock on the market. Trying to achieve short term gain wont cut it and trying to work out the lowest point will be difficult, its just guess work at best.

For me its a matter of just sitting back and watching, because I don't know how much more it will fall. If I buy now I know I have paid too much and its the easiest way to lose money IMO.

For me personally I like buying when there are signs of recovery, reduces my risk because I never know when I may need to sell and in a depressed market your options are limited.



MTR

 

Yes my post was specifically in relation the areas mentioned of Midland & Cannington as a real life example for others to apply elsewhere.

 

@Rixter did you ever buy new townhouses or avoided those because of the premium for being new?

 

@Observer Not brand new.

Ideally 1-7 year old established Townhouses & Villa's.

Keeping them modern in suburbs of strong demand to minimise vacancy rates and to maximise yields via rental income & depreciation.

 

article on a woodbridge reduced

http://www.propertyobserver.com.au/...op-ten-most-discounted-list-sqm-research.html

 

I clicked on the link, now it's advertised for "FROM $815,000". Ouch!

 

It isn't exactly a boutique suburb.
I guess they left their run a bit late to be selling for that sort of price.

 

Meh, next door, which is 2314m2 versus this one being 1308m2, sold last year for $875,000, whilst the smaller block thats now 815+ has a slightly nicer house, the agents just clearly stuffed up with that original asking price which makes this whole storey ****. They paid 55k back in 1991 so they've done alright

 

25 years ago?????

 

Congratulations, you did the math.

 

Which appears to be more due diligence than most.
It looks like they are heading lower than even the amended ask though.

 

What do you use to determine these signs?

 

A number of factors I look for, which is really just basic stuff that I think we all know-

Market sentiment changing, some positives coming into play ie economy etc
Stock reducing
Shorter selling time frame

.....and basically any area I am interested in, usually stick to 2-3 areas, I just keep tabs with at least 3-4 local agents. In many cases in the early stages you can just see it moving on realestate.com, bit like what happened in Girrawheen in 2012, under offers within 1-2 weeks it was obvious the market was in early stages of rising.

At the moment because we are seeing more stock coming to market I have no doubt Perth will continue to fall because there are not enough or worse no buyers and our economy is not crash hot at the moment. If I buy now I know I will lose money, as what I see as a bargain today will be a lose tomorrow just my opinion.

MTR

 

In Perth at the moment, more than one person at a home open would be a sign of recovery

But really, it is the number of listing dropping, activity at home opens, housing selling instead of sitting on the market for months, indications of prices increasing.

 

Its simple supply vs demand, check out every boom cycle that basically is why we have booms. There is no secret other than watching and buying when market is rising, does not have to be at the beginning of the boom, however that would be nice.

Some pockets in Sydney has gone from homes sold prior to first home open to lucky if you have 2-4 people coming through on home open. Its quite amazing how markets can turn practically overnight. Too bad for those who just purchased ouch

 

Perth seems to die quicker than fire up though. I know last time it tanked it seemed like overnight. But then after it started moving up, it was very slow at first. It only really picked up speed near the end.

 

Perth is the next market which will present an opportunity. Thought like MTR says...jumping in now is a bit premature. Perth started corrected early last year....it will be another 12-18 months for bottom. The boom is more like 2020...so a fair way away. But make hay while the sun shines.

 

Just finished watching the National Press Club , and it was mentioned we are about half way though duration of mining bust..id agree with this...so id say another few of years of current low commodity prices to go before we see sustained upward trajectory...therefore it does seem perth might be another 3-4 yrs of stagnant RE prices before going up...unless they can develop more significant non mining industries, which will see quicker acceleration of RE prices.

 

I would say at least 3-4 yrs of stagnant prices. I will be very happy if prices start increasing in 4 years. Happy and surprised!