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Choosing an Area to Buy an Investment Property: Perth

Perth is, by and large, considered a “luxury” investment property market. By this we mean that it swings more with ups and downs in global financial markets, as it is the type of city that gets wealthier when times are good, tourism is flourishing, and money is changing hands quickly. When all of that slows down, so does the return on investment property. Perth, therefore, should be looked at as a long-term buy, and you need to choose your area carefully if you are going to be investing here.

The Argument Against Seaside Properties

Whenever anyone starts looking at investment property, Perth seems to offer great opportunities for picking up properties close to the beaches. These properties are surely in demand, and prices will grow faster than others, right? Unfortunately, the market is generally overbought, and ocean-facing properties trade at a premium to real value. This means a seaside property is going to take a long time to achieve real capital growth – but it will attract higher rental income.

The argument against buying near the ocean is especially pertinent when looking at investment property. Perth has a large number of areas that are economically prosperous, close to schools and public amenities like shopping centres and public transport, and in high demand as rental areas. Most of these areas are not by the seaside, which is where wealthy professionals tend to buy.

If you’re looking for a value investment (one which is valued at less than what the property is theoretically worth), then you are much less likely to find it on the beach.

The Argument For Seaside Properties

Having said all that, those with the long view on wealth building would do well to look to the seaside for investment property. Perth, despite the global financial crisis, remains an attractive holiday destination, and its beaches will be beautiful long after the current storm has passed. This means that if you have the capital to invest in a seaside property, and the financial stability to weather sudden drops in prices and low capital growth for a few years, you will be able to reap large capital gains once international markets regain their composure.

The question is simply this: which type of investor are you? Are you savvy, new to the market and looking to buy a property that is undervalued in the hopes that you will be able to make a large, quick capital gain on it? Or are you more financially secure, looking for stable long-term income growth, and able to withstand short term value fluctuations?

If you’re the former, you’re a value property investor, and you’d do well to steer clear of seaside investment property. Perth has plenty of good value opportunities, but most of them are not by the seaside. If you’re the latter type of investor, then you’re more focused on growth, and you should include seaside properties in your list of potentials.

Other Things to Look For

There are a number of factors that you should look for in any investment property, whether you want to pick up a bargain fixer-upper or secure stable income:

  • Is the property easy to maintain, and built using high quality materials
  • Is the property modern? A modern property will depreciate faster, allowing you to deduct more for tax purposes.
  • Does the area have a good history of strong rental demand?
  • Is the area close to shops, transport, places of employment and schools?
  • Is the area currently enjoying, or expected to enjoy, large public or private sector investment, such as shopping malls or public facilities?

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Telephone: (08) 9468-0005
E-mail: info@investmentpropertyinperth.com