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10 Reasons to Invest in Western Property prices in and have made crazy gains in the past few years, making it more and more difficult to get into the market. If you’re tired of showing up at auctions only to see bids quickly pass your reserve, and you’re starting to think you’ll never own a home, then perhaps it’s time to think outside the square – or outside of the state to be specific. Why not consider the of , the picture-perfect Perth? Here are 10 good reasons why investing in Perth makes great sense. 1 ‘Rentvesting’ gets you a foot on the property ladder

We’re not suggesting you live in Perth (although of course it is an awesome place to live). But this is simply not possible if you work in the eastern states and your family and friends are there. However, more and more are discovering ‘rentvesting’. This is a concept where you buy property in a more affordable area to out, and you continue renting in a different location where you prefer to live due to work and family ties.

Over time, you will increase your equity in the rental property as it grows in value, which could fund a deposit for a property in your home state. Or you can always continue to ‘rentvest’. With all the tools available on the internet, it’s very easy to find properties and check them out remotely. If you choose, you can take a trip over to WA to check out prospective purchases before you buy. Then, once you are the proud owner of Perth property, you will need to engage the services of a top quality property manager to find the best tenants, manage the tenancy and make sure the property is looked after. All of this can be done online or on the phone too.

You’ll find that buying property in Perth may be very different from trying to buy in Sydney or Melbourne. Rather than finding property that is selling at way above the advertised ‘asking’ price, in Perth you’ll often find the opposite. You could snap up property under the asking price. Last year, Perth property was selling at up to 7% under its listed price.

‘Rentvesting’ – an answer to the property puzzle. 2 Perth houses are more affordable

Australia’s house prices are amongst It’s not just the price tag, it’s the the most expensive in the world. In total cost of entering the market. It’s fact, housing affordability is a major a simple but discouraging equation: headache for state and federal Higher house values = governments. And, property values • larger deposits in east coast capitals continue to rise. • more stamp duty You can see in the table that the • the risk of lower rental yields median house price in Sydney is But what if you were savvy enough now $850,000, and Melbourne to buy into a cheaper market, where and ’s are catching up capital growth was promising and fast. These median prices are from rents provided a positive cash flow? December 2016, and in 2017 they (No, we’re not dreaming!) are continuing to rise.

This is great if you’ve been lucky With a median house value enough to snap up a bargain in of $480k, Perth is one of the these cities before they became most affordable cities largely unaffordable, but for so many people it means the dream of home in Australia. ownership is slipping further away. As economic conditions in the start to improve following the softening of the mining boom, and with moderate growth predicted in 2017, could Western Australia’s cosmopolitan capital be Australia’s best buying opportunity market? Annual Increase Median

Sydney 16% $850,000

Melbourne 12% $640,000

Canberra 6.7% $601,000

Brisbane 4.4% $490,000

Perth -3.2% $480,000

Lower property prices = smaller deposit, less stamp duty and higher returns. 3 House prices look set to rise

What does it mean when house prices flatten out after a downturn in the market? One word: opportunity! There’s no doubt the boom-times of the property market in Perth and mining in Western Australia are over – and that’s a good thing. When returns seem too good to be true, that’s exactly what they are. Sure enough, there has been a correction in prices, which has brought values down to more reasonable levels.

A common way to look at property values is on the property clock.

Sellers’ Market

Higher Tighter Demand Finance

Upswing Downswing

Improved Lower Finance Demand Buyers’ Market

With two consecutive quarters of moderate growth, and You may not see the stellar growth in the Perth market the third-highest increase in property prices of all Australian that we did at the height of the mining boom, but you capitals in December 2016, all indications are that Perth is can reasonably expect a slow, steady trajectory. sitting pretty at six o’clock. Most importantly, however, if This is good news for smart investors – who doesn’t love you take another look at the clock, you’ll notice that from an opportunity that offers less risk and greater stability? here the only way is up.

Slow and steady wins the race. 4 Strengthening rental yields

At the height of Australia’s mining boom, rental properties were in high demand. Workers were relocating to Perth from around the country and overseas. Earning high wages, they were willing to pay high rents.

But September 2016 data from the Real Estate Institute of WA suggests that the subsequent decrease in median rent price has lured a new generation of renters out of the family home and into their first tenancies. These more favourable tenant conditions have seen leasing activity in Perth steadily climb – we’re talking an increase of 23.8% over the prior year!

Some pockets in the city’s northwest and southwest have not only recorded more new leases being taken out, but also increases in median rents. Perth landlords are able to rent their properties out almost a week more quickly than they could a year ago.

If Perth’s greater house affordability and decreasing vacancy haven’t caught your attention, then perhaps capital’s gross rental yield will make you sit up and take notice. Because it’s higher than those of either Sydney or Melbourne.

In fact, at 3.6% Perth’s median yield is 0.5% higher than all other capital cities combined. Remember how we mentioned the potential for positive cash flow from property investing earlier?

A new lease on for rentals and an impressive rental yield. 5 Perth’s economy is set to turn the corner

No-one has a crystal ball, but there are reports that the Western Australian economy is set to grow at a modest pace, driven by the export sector. While the mining and resource industries are still important to the WA economy, other sectors such as tourism and healthcare – with an aging population – are set to expand.

Unemployment rates are already evening out and with interest rates still at historic lows, buyers are returning to the property market. This can be seen in the decrease in the average time that houses for sale stay on the market. In a depressed market, it takes much longer to sell a property. When things are looking up, sellers can sell up and move on far more quickly.

Population growth is an important indicator of a strong economy.

According to ID – the population experts, the population of is projected to increase from

1.83 million in 2011 to 2.35 million in 2021. This increase represents 82%. More people means a greater demand for property, which is what investors look for.

Commentators are starting to believe that Perth’s property market has hit bottom – the only way now is up! 6 Perth is still a base for FIFO workers

You are probably familiar with the This eclipsed the previous record acronym, FIFO. It stands for ‘fly-in, of $12.4 billion set in 2013, at a fly-out’, and it refers to workers who time when resource prices were travel to remote areas to work in the much higher. mining and resources industries. Although commodity prices have They often work for a solid three fallen dramatically since the height of or four weeks and then have an the boom, Bob Gregory says it’s not extended leave time back home yet over. with their families. Perth is a popular “If you think of the boom in terms of base for FIFO workers, who have increased exports of minerals, that often relocated from eastern states. was very, very late getting started,” This makes trips out to their working he says. “That’s only been going location shorter and well, also, Perth really seriously for maybe three- is a great place to live. quarters of a decade, and that’s Rental demand from FIFO workers going to get stronger”. contributes to a strong rental market. So how does it look for FIFO workers? Perth still supports The ‘boom’ time may be behind Perth, but it’s definitely not in the an active resources ‘gloom’ time. and mining According to industry. newspaper, just when you thought the resources boom was behind us, Australian mining companies delivered their best year ever in 2016, exporting $13.4 billion worth of resources. 7 Perth’s a great place to live!

Perth is often described as a big, friendly country . Even though you may be buying property in Perth as Large enough to attract sporting, arts and cultural events an investment and you won’t be enjoying the awesome that other state capitals enjoy, there’s no doubt that the lifestyle yourself, you’ll be offering potential tenants all pace of life is more relaxed. You only have to look at their of these delights. Perth was voted the world’s 7th most peak hour traffic to notice a welcome difference. livable city in 2016.

The is warm, with mild winters and the extreme Premier and Tourism Minister said at summer heat is pleasantly cooled down most days by the the time: “Perth is a vibrant city with clear skies, fresh ‘’ doctor – the name locals give to the cooling air and beautiful beaches, where people can still enjoy afternoon sea breezes. the benefits of a modern, sophisticated city and a relaxed lifestyle. The beaches are stunning, attracting boaties “When you look around the world where else would you and surfers from around the globe. get the kind of health care and education standards that If water sports are not your thing, then Perth has more are delivered in WA?” than its fair share of parks and gardens – tourist flock from Good point! around the globe There’s something for everyone in Perth! 8 Greater global access with non-stop flights to

An added attraction to Perth is that it’s set to become an even more important gateway for global travellers.

From 2018, is introducing direct flights from Perth to on its new 787-9 Dreamliner. No more arduous plane changes in South East or the Middle East. Imagine not having to negotiate busy international airports when you’re in transit. Very soon passengers will be able get on board in Perth and arrive in London without leaving their seats.

Qantas confirmed these plans in December 2016, giving a fillip to Perth’s tourism industry and the potential for further new jobs in construction too. This is because Qantas, the West and will contribute to an upgrade of the airport to facilitate the new route.

Of course, these direct flights will return to Perth with tourists eager to sample the delights Perth has to offer. Perth will become the gateway to Australia. More jobs and more tourists – great things to look forward to. 9 Less high density development than in the eastern capital cities

The glut that the media has been warning about is mainly an east coast affliction. There has just not been the same level of high density over-development in Perth that is being seen in Sydney, Melbourne and , where there are warnings about oversupply and possible corrections in the apartment market.

One reason could be that Perth residents prefer the detached family home, on a reasonably sized block with three to four bedrooms.

In a study conducted by the Grattan Institute, it was found that 44% of Perth residents expressed a preference for three to four bedroom homes. 79% preferred to live in a separate dwelling.

The difference between Perth and Sydney and Melbourne is that you don’t have to live too far out of the city to find affordable family homes.

Get more bang for your buck with larger homes at an affordable price. 10 Perth’s not Sydney or Melbourne

Just in case you’re still not system, which can make you spend convinced that Perth is a good more than you can afford under in the place to buy property, we’re stressful auction setting. Instead you making it very clear in this final can take your time making your offer. reason – which is that it’s different. You don’t have to travel way out of Perth is a more relaxed, the city to find affordable property – like you do in Sydney or Melbourne. slower-paced and less And you don’t have to accept poor competitive property market quality property, just because that’s than those that you find in the all you can afford. eastern states. Oh, and the weather’s better too! Perth is the sunniest capital in There’s not the ‘buyer frenzy’ that Australia with an average of eight drives prices up to unrealistic levels hours sunshine a day. in short periods of time. There are not so many buyers vying for the same piece of real estate. The future’s brighter Property is usually sold via private sale – not the hyped up auction in Perth! Sales and Information Office

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Disclaimer: The information contained in this document is in good faith; however neither Satterley nor any of its directors, agents or employees give any warranty of accuracy nor accepts any liability as result of a reliance upon the information, advice, statement or opinion contained in this document. This disclaimer is subject to any contrary legislative provisions. © Satterley 2017. HONE0197 ISSUE 1 July 2017