Perth "Short-term" hold which is better?

Specific to Perth, I've read quite a few suggestions that given a certain budget the best option is to purchase a house on a good size, subdivisible block (assuming a long term hold).

However, if the assumption is a short-term hold (3 or so years) without the intention to personally develop it, does that suggestion still stand?

For example, with a budget of <$500k, in your opinion, am I better off purchasing a subdivisible block (somewhere say Thornlie or Morley) or do you think it's a better idea to purchase a non-strata house on small land but closer to the city (say St James)? Or is there another option you think is even more preferable?

During the last Perth boom in 2014, how did prices compare for those options? At a guess, subdivisible blocks did especially well because of speculation?

I know there are many negatives to selling within a short time frame and yes, 3 or so years is quite arbitrary, but for hypothetical's sake, please humour me!

 

I can't think of many scenarios where the prospects for growth would be different for 3 years versus longer term. Not with a buy and hold strategy anyway.

 

Generally yes. A development block is always attractive.

 

You will have a lot of local competition for development sites in this current market and even if you can secure will it stack up profit-wise?

 

It probably wont stack up as prices have been soaring

Thing is this is a hard price point, limited

 

I think with such a short time frame growth may be similar but the subdivisable block will have additional constraints of profitability/feasibility when it comes time to sell. ie the person buying it needs to be able to get development funding, construction prices might rise so much that people don't want to pay as much for development sites etc etc

I think with if you're not intending to personally develop it then I would probably get into the best area I could with the money. That may still be a developable block but it might not be. The upside of a standard house over a developable block is that the yield might be better as it's less likely to be a crappy house on something that's being sold at land value.

 

Hi @MTR i agree the price point isn't ideal probably only acceptable for >12-15km out.

 

Hi @Westminster , thanks for your thoughts. That's what I'm thinking too.
The idea of a developable block is very tempting. I think especially when I compare the price and availability of a developable block in Sydney vs. Perth. In saying that, the dynamics in Perth are totally different from what I can tell. It seems much more common for the average person to try their hand at a simple development maybe a subdivision for example. Whereas in Sydney it wouldn't cross the mind of most people i daresay.

 

??? Some lower entry point areas that come to mind

Girrawheen
Koondoola
Balga
Beechboro
Lockridge
Mirrabooka
Rockingham, Coolingup
Parmelia
Orelia
Medina

 

Thanks everyone for your responses, really appreciate you taking the time to reply!

 

Lot of the suburbs MTR mentioned you should be able to buy what your after (nearly 2 in some of them).

Would say most sites wont stack up so probably good time to buy (less competition and lower premium prices) as an investor and hold till the site becomes feasible then sell to a developer or even consider developing yourself at the time

In saying that I doubt there would be enough movements in those suburbs in a short term period but maybe if your planning to hold longer (but who knows)

 

today is different from 2014 boom

In 2013/2014 boom cycle……this market was driven by the new grants for FHB. Houses sub $550,000 started soaring and this was the main driver.
Developers started jumping in building for this market.

It was a short boom cycle about 2 years.
However, blue chip, high end did nothing, zip growth during this period

Fast forward today its government driven boom cycle, government grants, driving building boom, and low interest rate environment.
Also In this market today we finally see blue chip areas rise by at least 10%.
So demand is not just driven by FHB market.
Development sites in many areas have risen sharply over the last 18 months.
Why I say its harder for numbers to stack up, if land banking is an option then I think its a good long term option, but you need deep pockets for this strategy

 

I am pushing this thread up as I can see there are still potential growth in some of the suburbs mentioned above.

Personally I am chasing my last one as a non-bank lender is willing to borrow me

 

Mirrabooka has potential

 

Kwinana should be on this list

 

I am also thinking Girrawheen

 

What about Midland? The social issues can't be much worse then some of those other areas can they?

Looks like a lot of house for the price
5 Ryan Court, Midland, WA 6056 https://www.realestate.com.au/property-house-wa-midland-142782424

 

What are your thoughts about Bayswater & Bassendean Vs Down south Parmelia , Kwinana & Waikiki
There is a bit of social housing and a large blue collared work force in these areas but then also there are significant local employment hubs there as well.

Long term view Thornlie& Beckenham surely can turn into Ascot & Belmont but I am not so sure about these 2 areas? Thoughts??