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Have Perth investors missed the boat?

Wednesday, 5th Feb 2014

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With the Perth market producing solid value growth over 2013, many would-be investors are asking whether they have missed the boat.

While it’s true that growth may slow this year from last year’s growth rates in some parts of the market, the good news is that there are still fantastic opportunities available. Here are my tips for making the most of those opportunities.

Focus on the long-term picture

In the long term, you certainly haven’t missed the boat. Perth is a rapidly-growing city with strong fundamentals, including a solid economy and a rapidly-growing population.

The market hasn’t overshot those fundamentals by any stretch of the imagination. Demand for housing still remains strong, evidenced by the fact that rental yields are still good, even after last year’s growth. Perth is still in a recovery phase.

Always be picky 

You should always be picky when it comes to investing your hard-earned cash, but if you want to see growth over the short and medium-term, you need to be particularly astute with your investment decisions. Specifically, you need to understand what really drives values in the market and look for more localised growth drivers rather than relying on the whole market to shift.

Choose areas that are being re-assessed

Look to invest in areas that are being re-assessed by the market. What do I mean? Imagine there was a ladder of suburbs in Perth with ‘best suburb’ at the top and ‘worst suburb’ at the bottom. What you are looking for are the suburbs that are moving up the ladder, the ones that are changing both physically and in the minds of buyers and renters. There are many examples of such areas in Perth that will outperform the rest of the market.

Keep an eye on supply

The supply of property in some parts of Perth is expected to increase, which will put the handbrake on growth for a number of years. Consider how much future supply an area has before deciding to invest there.

Give yourself the option to manufacture growth

Even if you plan to buy and hold for the long-term, it makes sense to choose a property that has value-add potential. This way, when the time is right you can manufacture your own growth through renovation or development.

Accept the bumps in the road

Emotion is the enemy of investing. It’s important, therefore, to always remain level-headed, regardless of the events that may unfold. When economic conditions take a turn for the worst, creating headwinds for the property market, it’s important not to be spooked into selling what could otherwise be a fantastic long-term investment. Similarly, when the market is red hot you shouldn’t rush in and pay above the odds just to secure a property.