A dwelling’s character, style and size can vary from one capital to the next. So when buying real estate in Perth what should you look for to maximise growth and return?
Like any other capital city, Perth’s dwellings can vary enormously across the suburbs. If you’re not already familiar with the Perth landscape then first let us give you a quick rundown. Open up an online map and you’ll be acquainted with the city in no time.
The Swan River is what separates Perth’s northern suburbs from its southern suburbs, similar to what the Sydney Harbour does in Sydney and what the Brisbane River does in the Queensland capital.
Perth’s highest concentration of older dwellings is typically located within close proximity to the CBD, often in riverside positions near or on the many peninsulas, headlands and bays on the snaking Swan River. This waterside West Australian real estate is often the most expensive in Perth.
Subiaco, Peppermint Grove, Cottesloe, Mosman Park, Dalkeith, Claremont, Nedlands and South Perth spring to mind as some of the city’s older suburbs. In these places you can find homes in all sorts of shapes, sizes and eras ranging from Federation-style to old weatherboard, to modern rendered brick.
While the scarcity factor of buying an historic dwelling in one of the older and pricier suburbs may be the general rule when investing in a ‘buy-and-hold’ property in other capitals, in Perth these properties are normally way over the average investor’s budget.
This brings us to another opportunity to manufacture capital growth – buying a larger block that qualifies for development. Whether you demolish the existing home and build two townhouses, keep the existing home and build one behind or put up four small apartments; this is a strategy we recommend, depending on budget and objectives.
What we like about this type of property buying in Perth is it provides more capital growth in the long term, especially once the blocks are subdivided. Most importantly, it helps you build a portfolio of properties. And of course having a tenant in the house helps alleviate the holding costs, which means it’s not necessary to rush into a small development. Instead you can wait for a time that best suits you and the market demand.
For investors who don’t wish to develop and would rather buy an established dwelling within close proximity to the Perth CBD, shopping hubs and public transport, we generally recommend villas for the average budget rather than going far out to afford a big house on a block.
Villas tend to be single-level detached dwellings in complexes with a minimum of two dwellings, often four or more. We usually suggest the smaller the complex the better the investment. Older villas usually have three bedrooms and one bathroom. Sometimes you’ll find four small bedrooms. They often have carports or car parks instead of garages and are positioned on small blocks of land.
This villa option is highly attractive to tenants and can attract premium rents. Due to the demand of being in a convenient location, capital growth can be strong.
Our third recommendation is to target houses on blocks in areas proposed for rezoning. Once rezoning has been given the green light, they can offer great potential return and capital growth. Plus, they’re generally a little cheaper than properties where zoning for higher density building is already in place.
History has shown in many Perth suburbs that in earlier stages of proposed rezoning, prices are relatively stable. However as time creeps closer to the eventual gazetting of the change, demand increases rapidly, and as a consequence, an increase in pricing.
The team at Property Wizards dedicates time to gaining firsthand information on local councils’ proposed rezonings, which offers our clients a small window to buy a property at normal residential prices but with the added X-Factor of the future zoning changes.
Now that we’ve revealed our top three dwelling choices for investors to target, it’s time to tell you what we generally would avoid. It’s simple: House and land packages typically a long way out from the Perth city.
Our general rule we tell investors when property buying in Perth is to secure one of our top three dwelling types within 20km of the city or 10km of the ocean. This is where you’re more likely to maximise your capital growth and return. Make sense?
If you have an interest in building your wealth through property, then call us on (08) 9381-7450, or request a FREE Starter Pack.