Extreme 20-year long-term approach needed for Perth market
Investors interested in Western Australia’s capital city need to be aware that some are calling to take a very long-term look at the Perth property market of 20 years long. Is the wait worth the two-decade payoff?
Recent population ABS figures indicate that a long-term approach will work best in the Perth market, according to Shane Kempton, chief operations officer at Professionals Real Estate Group in Western Australia and the Northern Territory.
The ABS figures, pointing to a population increase between 1.1 million and 1.8 million by 2036, indicate that Perth could rise to 3.2 million to 4 million in 20 years.
“While the Perth property market is currently subdued, the reality is that the city will achieve high levels of population growth over the next two decades which will fuel a growing demand for property,” Mr Kempton said.
“Unfortunately, many property commentators are just focusing the outlook for the Perth property market over the next year, which can discourage many people from buying a property in the city and therefore miss out on the long-term opportunities this real estate market offers.
“Perth is now a mature capital city, and by 2036, it could nearly be the size of Melbourne based on the more optimistic population projections… [and] that means that smart property buyers who purchase a property now in a high-demand area will be assured of achieving capital growth over the next two decades as the population of the city expands.”
Over this twenty year span, Mr Kempton said investors could see values double.
"Historically, the value of properties in Perth have doubled in value every 10 to 15 years," he said.
"However, in the current low inflation environment, this trend may take slightly longer to achieve and as a result Perth property values should at least double ... over the next 20 years."
Hotspot areas, according to Mr Kempton, are located close to the city centre, river and ocean.
“For example, you can currently buy older-style villas and apartments in Perth within a 10-kilometre radius of the Perth CBD, such as the suburbs of Tuart Hill and Yokine, for under $450,000, which is a fantastic investment for a first home buyer or investor,” the COO said.
“There are also a wide range of affordable properties in the riverside near city suburbs Rivervale, Maylands, Bayswater, Wilson and Ferndale.
“For property buyers seeking oceanside property, the coastal strip between Rockingham and Mandurah offers excellent buying. In these locations, you can still buy standalone homes for under $350,000… [and] this coastal strip has easy access to the Perth city centre as commuters can use the Perth to Mandurah railway as well as the freeway.”
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