The real estate blog.

Travelling to the west this time…

Australian real estate investing in Perth has continued to show excellent results in terms of capital growth and good rental yields.

In the final quarter of 2006, ending 31st December, median house prices in Perth rose by nearly 5 per cent to $325,000. Over the past year, Perth house prices have increased by 18 per cent and rents have also risen by 25 per cent. The supply of new homes has slowed although demand is still strong.

Perth vacancy rates for rental accommodation have stayed steady at about 1.6 percent for the second quarter in 2007. The median rent in Perth has risen by approximately $44 per week since 2004. Perth has the fourth highest median house prices of Australian capital cities, with Sydney first followed by Melbourne and Canberra in that order.

This means that in terms of entry costs to purchase properties, Perth offers better value for return on investment than these other capital cities.

Over the past twelve months the amount of time a property was listed for sale before being sold rose from thirty eight to eighty nine days. Furthermore, vendors reduced their list prices by 6 percent on average compared to 3.5 per cent during the previous year.

Essentially, low interest rates and Western Australia’s resource boom has fuelled capital growth and increase in rental returns. As long as these two elements remain steady, Western Australia will remain a positive Australian real estate investing option.

However, the fact that properties are taking around three months to move is not a good sign, particularly when the turnaround time in last year’s September quarter was forty five and in the December quarter was thirty seven. This suggests that the market is beginning to settle from overly sharp growth.

For Australian real estate investing, this means that good investment returns in Western Australia should return to traditional long term patterns rather than short term speculation.

When discussing the Western Australian property market, we cannot neglect the state’s regional areas which also have experienced strong growth.  In particular, coastal areas such as Albany, Bunbury, Busselton, Geraldton and Mandurah have recorded strong growth while inland areas such as Carnarvon, Newman, Norseman, Port Hedland and Roebourne have experienced high demand from mining workers which has pushed up prices.

Prices in regional areas have increased by nearly 22 percent over the past year with a median house price of $310,000 making them attractive for Australian real estate investing. Vacant blocks of residential land in regional W.A. have increased in value by up to 23 per cent during the past year with a median price of $166,000.

The boom in the W.A. residential property market has been largely fuelled by the resources boom in the state.

This means that there is a risk when demand for export slows that prices will be negatively affected. It is important when Australian real estate investing in Western Australia that investors keep a close eye on the performance of the resources sector and possible impacts on the state economy.

All the best in your Investing…in the wild wild west!

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