WA Regional WA

Hi folks

Lots of talk about Perth but hardly any about the regionals.

6 to 10 years ago, there were plenty talks about the sizeable regional towns of Mandurah, Bunbury, Busselton, Margaret River etc growing to take off some "heat" away from Perth.

Of course, we know now that most of them (if not all) have since, like Perth, suffered to varying extend, a drop in house prices.

Now with Perth seemingly "been through the worst", what's your view on these regional towns? Some of the inner core areas in Bunbury and Busselton are selling at 20 to 25% less than its peak and looks like good bargains to me. Is it a good time to buy in the these areas of these regional towns?

Bunbury, Busselton, Albany and Margaret River esp are still growing in population and there seems to be significant long term development in these towns. Tourism looks to be doing well in these places too. Surely WA is not just about Perth?

 

Margaret River isn't growing....

Look to the holiday towns.

 

I think a lot of regional WA is revising their growth figures from a few years back, just look at Karratha, even with Royalties for Regions

 

Yes you could get some bargains in the regionals but if history is anything to go by I would look to Perth first as the capital city tends to be the first to move.
The lag between the capital city moving and regionals tends to be a few years.
Holiday spots tend to move a little more quickly than the regionals

Mining moves independently
Interestingly anyone who bought i
wisely in Newman, port headland over 6 months ago would probably have gone close to doubling there money
This may not show up in the stats but up until a few months ago there were still distressed listings and you could get a place in Newman for 50k and port headland low to mid 100s

I don't think you will see those prices again

 

Strongly, I agree with what you said. There's a school of thought saying that as houses now in Karratha are being sold below replacement costs, and with jobs there on rise, it might be worth the gamble to buy there now?? Even if there's a crash or stagnation here, it won't be that bad as you're still buying in rock bottom prices. But if the rise continue, you are in a good position to earn good very profits both from returns and capital gains. Getting loans to buy here will be a big issue though so I think you got to buy in cash.

What is your thoughts of KALGOORIE? Is it a place worth investing now considering houses have dropped significantly in price and the vacancy rates have tightened the past few years?

 

One of my clients just signed on a property in Hedland for $65k - val came in at $80k. Instant equity - not something you see very often!

 

Any one buying in collie, merreden or northam?
Prices have come down a fair bit since peak.

There is geraldron but the cheap properties are in really disgusting areas and values have fallen a lot.

 

You're not wrong.

$15k for a block in Spalding. Like 1980s prices! 28 Houston Street, Spalding, WA 6530
Compare with $65k in 2015 28 Houston Street, Spalding, WA 6530

And $65k for this house is down to 1990s prices 12 Abraham Street, Utakarra, WA 6530
Peaked in 2006 at $165k 12 Abraham Street, Utakarra, WA 6530 Sale & Rental History - Property 360

Feel the pain. "The owners loss is your gain". $59k house 32 Rifle Range Rd, Rangeway, WA 6530
Down from $98k in 2012 32 Rifle Range Road, Rangeway, WA 6530

And don't tread on the solar hot water system! 6 Betula Street, Rangeway, WA 6530

 

Yep, some of these would have been $150 - $200k during the mining boom.

Its a nice town, decent population as well. It might be a good time to get in and wait but the properties don't get rented either. Not really a good situation.

 

These cheaper properties often need a tonne of work
they are only worth purchasing if you have the resources to go in and fix them yourself
otherwise not worth the effort for a long term cashflow hold
could still make gains in medium term though

I have posted this before but I think it's a good time for those interested in cash flow to be into real estate. I won't use the word invest as it won't be passive!
I'm thinking it's going to be quite common to see 10% yields In remote regional areas - remote being not an easy commute to major capital

 

Maybe but that 10 percent is going to be higher risk than in the capitals.

Ye olde risk/reward ......

 

The 10% is also a gross yield. If you take out the proportionately very high council rates, water and property management (say 12-15% in WA) and insurance your yield will drop to nearer to 5%. And when the hot water system needs replacing then that's many weeks of rent to recoup that. The HWS costing as much on a $70k regional house as a $700k house in a capital city if not more due to less competition.

There are probably opportunities in the larger WA regional centres to set up a cut price but high quality property management agency (charging just a 10% all inclusive fee) perhaps with a selective approach eg only taking on better end properties that have been well looked after. It could also be selective as regards landlord philosophy and selection (so that they don't accept stingy landlords that let the property rot and tenant quality to deteriorate, creating more work and overheads).

 

There's a mob who does exactly what you described in Townsville

 

I bet people who bought in Darwin 3 years ago wouldn't agree on the risk statement
same as people who bought in Sydney or Melb late last year
losing a couple of hundred k in a year is pretty high risk and not to mention a cracking 3 -4 % gross yield

it's all about timing to minimise risk
if your buying these properties for around 100k in a decent town and with 10%yield then what is the risk?

 

I think many Australians have a deep ****** thinking that only Capital cities are worthy of buying and investing in. That is not always true.

I have seen how some people made very good money buying in selected regional towns. Yes, there are risks doing so but so do people who buy in big cities. Not to mention there are always a group of buyers who just have a small capital of say $150 to $250k. They couldn't afford to buy in the capital cities yet want to enter into the market so buying into regional is their next best bet.

The importance to buying anything is timing, as strongly mentioned. If you buy at the bottom of the mining boom like some said, you would have done well now. Even better than if you bought in Perth possibly.

I have seen how some regional towns in WA declining so much that there seems little risks buying into them. It's hard to get any cheaper and if you can get a gross return of 10 to 13%, I do not think you could continuously lose money on that.

For the followers of the real estate market in NSW and VIC, it is no secret now that it's the regional towns that are doing well, in contrast to the situation in Sydney and Melbourne. So regional towns do GROW.

Moreover, if the market really dip further, as some forsee, those buying in regionals will be lesser impacted as they got just these little capital to lose, unlike those who might have bought in the big cities where a good house would have costed up to a million dollars - their losses would be far greater.

 

If buying in Rangeway, there's a fair risk your tenants will burn your house down. Actually, that might be a best case scenario - the house insurance would probably be worth twice the purchase price!

At the end of the day, if you buy for $60k in Rangeway, all you can lose is $60k. you can recover from that, where it's much harder to recover for $200k+ underwater.

 

Merredin No nothing there. Wheatbelt town. Who are you going to rent your house to and in the future sell it to?

Collie. Do you make, sell or use meth? Funny town in the past one group did well they worked at coal mines power station etc other group work for Centerlink or in Meth industry. Some pig hunting down this way if that is how you roll.

Northam. Daily train to Perth (Mon to Fri) if times work for you. Suffers from being an hour from Perth. Just easier to go to Midland to do your shopping. Hot dry miserable place in summer. Again social issues. Often see properties for sale in winter when things are green. Again who will rent your property (where will they work to make money to pay you) or buy from you in the future? Limited work opportunities.

I see it on here often. What are the "drivers" that will make place desirable in the future?

 

People go there with a plan of being there a short time. Some end up staying a very long time. So good for owners renting out property but probably limits home buyers. Unlimited potential for new land around the town. 12 hour work shifts make living in the town unattractive imho I would rather work Fifo if working in mining. Suffered from a major property boom in mid to late 80s early 90s. Not sure if prices have ever recovered. Also social tension in the town. As always buying in a mining town is very speculative. Maybe in some of the older areas like Lamington.

Again what are the "drivers" for property growth?

https://www.perthnow.com.au/news/go...nsions-in-kalgoorlie-still-high-ng-b88922748z

 

Take Laverton WA for example.
6 to 10 years ago houses in this street rented for $1000 a week (yes thousand) I worked for the comapny who leased next door.
Lots of potential tenants most on welfare.
13 Craiggie Street, Laverton, WA 6440

 

couple of places we own where I wouldn't mind the tenant doing the old 'Tom Jones'