site map 
6 August 2010
Subiaco / Leederville
These areas continue to be a lifestyle and downsize location which will increasingly gain in popularity.
Cottesloe / Peppermint Grove
As the sharemarket recovers, so will these suburbs as they were very heavily affected by the economic downturn.
Greenwood / Kingsley / Padbury / Joondalup (northern transport spine)
As the upzoning pressure around northern train stations increases, this demand will give a one-off jump in values.
Midland
Flow on benefits from redevelopment. Located on the doorstep of the Swan Valley and offers value for money.
Mandurah - town centre and coastal strip
Oversupplied with property for sale, incurring big price drops. One of the fastest growing shires and offering value for money property. Just don't buy quite yet - watch carefully and time your buy as stock levels start to drop.
First home buyers ...... are there any left in the market? If so,
Padbury / Craigie / Beldon / Heathridge
These areas have been first home buyer suburbs since the 1980's and are now becoming second home buyer areas. Located close to the coast, freeway, train line and represent mostly land value. Have high relative rental values underpinning prices.
Hammond Park
Offering plenty of new infrastructure however the new land supply is drying up. Represents an above average location at an above average price.
Joondalup
Provides good infrastruture and employment opportunities. Becoming more of a regional area.
Butler / Alkimos
These suburbs are new housing locations featuring master-planned communities. Substantial coastal infrastructure to be implemented to add value.
Also look out for infill property, for example home units in locations such as East Fremantle, Fremantle, Wembley Downs, Leederville, West Perth, North Perth, Como.
Don't forget the older style home units as "live in/do up" properties in well located established areas, the house themselves are not overly valuable but the location is.
2 August 2010
Today, people are investing, when in the past they may have been more likely to upgrade their own home. The high changeover cost means that a homeowner can use part of this potential cost to renovate their own home and still leave enough for a deposit on an investment property. This strategy provides a wealth creation opportunity outside of the main home and lessens the likelihood of having to downgrade at a later time when they need to free up some capital should they wish to retire, particularly if their superannuation has dropped due to market fluctuations outside of their control.
So investing today is all about location, position and getting the formula right.
Location we know, however get the position wrong within the suburb and your hard work can be undone. The right position is where properties are most tightly held. Every suburb has a pocket where many of the owners have lived for 20 years. An example of a great position for instance is being situated opposite a park.
The formula? People tend to invest either for a higher income return or for capital growth, however you can achieve both. If you buy 70%+ of the total value of the property in the land value component, and buy on a yield of around 4%, you are achieving both objectives.
To give you an example of this formula - If the total property has a value of say $500,000 and it sits on a piece of land which is worth $350,000 you have achieved an important part of obtaining capital growth, remembering that it is the land that appreciates and the buildings which depreciate over time. Land is the driver of growth.
Secondly, a 4% yield goes a long way toward paying the loan, especially if you purchase the property with a reasonable deposit. A strong yield helps alleviate some risk in having the income to pay the loan amount and their takes pressure off your wage.
Lastly, look for areas that have the scope for future increased zoning densities. For example, a single residence site which is earmarked to become a duplex or triplex site. This information is accessible from the local shire or planning authority. The race is on right around the country to cease as much urban sprawl as possible and the high costs associated with the provision of new infrastructure.
So the best tip for investors is to get the right location, position, formula and with rezoning potential and wow, what an opportunity, and yes properties such as this do exist today.
10 July 2010
The Government's Directions 2031 development blueprint calls for 47 per cent of all new dwellings to be in infill areas in established suburbs. The City of Joondalup has released its draft strategy for public comment, earmarking 10 areas to be rezoned for higher density development.
Gavin: "Some areas in Joondalup were proposed to change from an R20 zoning to R40. The areas identified for rezoning in the draft are mostly centred around the train stations and freeway off-ramps. Most shires will be going through the same process as they try to increase the densities to implement the strategies of Directions 2031 which is due out next month in its finalised capacity."
"The proposed rezoning in Joondalup presented an opportunity for buyers. You literally can buy on one side of the street for the exact same price as the opposite side today and if this strategy goes through, the side of the street that gets rezoned will probably increase in value overnight from $500,000 to $700,000."
"It's very important to increase density because it increases the diversity of housing in an area. I'm a great advocate for diversity of housing in these areas which at the moment is fairly vanilla. In the longer term, the most successful suburbs are the suburbs that offer diverse range of properties."
26 May 2010
With constantly changing headlines and media stories ranging from boom to grief, how can anyone possibly know what is going on in our property market?
It is said that uncertainty is the friend of the investor as there is a real premium paid for assets when there is certainty. So with my ‘investors hat’ on, what do I like about the property market today?
The fact that uncertainty abounds this is undoubtedly a true friend for the investor.
For those who may not be aware, I have been a regular property commentator on ABC radio now for 7 years. Being on the ‘Morning Show’ with Geoff Hutchison, we take talk-back calls from listeners and answer people’s property questions, address their concerns and gratefully accept their feedback.
Interestingly, the types of questions that are asked have been proven in the past to be the issues that people are really focussed upon and hence I find this becomes a very accurate guide of what is to occur in the future within the real estate market.
It picked the boom. It picked the bust. It picked the trend of investing in Melbourne. And it did all of this ahead of time.
So what is this caller feedback predicting today?
The last three Thursday mornings I have been on the radio, we have been inundated with phone calls and sms text messages from listeners, so many in fact that we have not been able to answer all of them. Interestingly, six months ago, we were regularly receiving half of this number of calls.
What this says to me is that people are clearly interested in property again.
Importantly, what are the questions regarding? Definitively three things:
Investing, trading up the family home and investment in regional areas.
I would suggest that if the past trend is any guide to the future, and on the basis of this theory, we will see a strong surge of investor activity along with a significant increase in trade-up buyers and these factors combined will probably push prices in those areas standing to gain the most from such a trend.
Let’s watch with anticipation.
22 May 2010
$1m no longer lifts homebuyers into the elite suburbs......
Today, a million dollars does not guarantee a high-end home in a top suburb, in fact it might not be enough to even squeeze into the city's most coveted locations.
Gavin: "$1 million would now buy only entry-level or investment-grade property in many prestige suburbs. If you are talking the western suburbs then a million dollars wouldn't even buy you a house. For $1 million you're not buying in the most elite suburbs. For example, you may be able to buy a home in Claremont or Nedlands but not in Cottesloe or Peppermint Grove."
"A million dollars would provide you with more house and land in the middle ring of suburbs. You're going to get a lot more house for your money, and a lot bigger block, perhaps a development block in areas like Osborne Park, Balcatta, Victoria Park - development sites with some change left over."
"Floreat offers the best value over $1 million Watermans Bay also had scope for capital growth, with a median sale price of $1.07 million. Peppermint Grove shouldn't be discounted, even though its median sale price tipped $4.5 million, because it is Perth's top suburb."
28 April 2010
"What physical features drive the Perth market?"......
Gavin: "Much like Sydney, people in Perth are fascinated by property that incorporates the water lifestyle. When I first started as a valuer 25 years ago, houses in beachside suburbs were worth roughly the same as houses inland, but the beachside houses are now worth three times as much.....
....."Mining affects the property market on two levels. In terms of sentiment, Perth has always been heavily influenced by mining boom-bust mentality. Combine this with that feeling of being cut off from the rest of the world, and sentiment in Perth can race through the streets like it does in country towns.
"The sector also directly affects property's fundamentals. When there is a mining expansion or a recovery after a hiatus, we see an influx of highly paid professionals such as engineers and geologists jetting into Perth. They enter the top end rental market and shortly after become home buyers, providing an immediate injection to the property market, particularly for houses within 10 minutes drive of the beach.....
....."The mining industry recruits the same skilled labour required for land development and housing construction and they have a history of paying large wage premiums. They also have a history of not training people themselves, so during a mining boom we see an exodus of the workers needed to bridge our housing gap.....
....."Market prices for houses on an 800 metre square block in the right middle suburbs are 70% land value. They are also achieving reasonable rent yields of 3.5 to 4%. This means an investor can buy a property with capital growth and rental returns now and the potential for significant capital appreciation in the future.
"Hegney particularly favours large house blocks in areas such as Duncraig, Greenwood and Hamersley, but also in southern suburbs like Bateman, Bull Creek, Leeming and Murdoch. These areas are close enough to the coast for that summer lifestyle and potential for releasing capital value if moves to consolidate Perth's growing sprawl happen. In the meantime, these suburbs are close enough to the freeway and rail corridors that allow residents to move around the city easily.
"Has the day of compact houses, strata properties and units in the sburbs adjoining the CBD passed?"......
Gavin: "Not at all. There's no question that these property types, particularly in areas like Subiaco and South Perth are a solid investment and they've certainly proved themselves in the past. Indeed they're in hot demand at the moment. But for investors with a slightly longer time frame - say, 10 years plus - I would be looking at some of these middle ring suburbs as well."
18 April 2010
Rising rents, shortage of affordable land and increasing demand for low-maintenance properties are driving baby boomers to explore the subdivision option......
"Developing family lots offers many social and economic benefits, but planning and zoning regulations will need to change to facilitate greater medium-density in Perth's suburbs.
"Planning authorities can facilitate development of family lots by granting a 50 per cent density planning bonus to homeowners wishing to allow their kids to build in the back yard.
"This basically means that property owners would get a density bonus to provide affordable housing for first-time buyers.
"So, an R-20 property would effectively get the same density allowance as an R-30 zoned property and R-30 would get an R-45 allowance and so on.
9 April 2010
There is a lot of talk about investing in property at the moment. The resurgent stories of Perth and Western Australia being the economic powerhouse of Australia, of the southern hemisphere, of the world, are certainly alive and well.
So those that have enough shares, are deterred by the volatility or just feel more comfortable with an investment that they can see, drive past and are familiar with (a home), gets the attention. We love our housing but love our homes more, and this brings people to property investment.
For some, it’s about making money, for others it’s about providing a home for another, others see it as security and some are just collectors, buying what they like the look of and wouldn’t buy something that they don’t. Some impulse buy, “oh we went for a drive last weekend….. and now we own it…..” Others study the market churning over the facts and often bury themselves in numbers, options and often base decisions on parts of the information which matter least. Some just get confused and don’t know what to buy so they either don’t act or they end up buying and regret.
And some just reach down and pick up the nugget, buying the right property, simply, quickly and barely miss out on any other aspect to life. Some just never get around to it. Some just want a bargain, whilst others just want to buy the next ‘hot’ suburb).
The important point is not so much which one of these you are, or that this is startling or astounding that such a large sum of money can be spent in such varied and sometimes erratic ways.
Buying property for the majority of people if about finding and providing a home.
Buying a property for the minority (1 in 5 buyers) is about investment. For the majority of investors, it is done in such a way that financial success is difficult to achieve because of the process they go through to buy it, many ways of which are listed above.
The truth is, if I gave you a ‘hot tip’ on what the next ‘hot’ suburb will be, many people still wouldn’t buy and those that did buy, shouldn’t have bought. Why?
Because ‘hot’ suburbs attract speculators and rise in price only to fall in price most times, as speculators move into the next ‘hot’ one, forgetting about the now ‘cold’ suburbs.
So let’s just fast-track to the solution. Hopefully in this list is the solution for you –
· Buy the location first, building second
· Buy the home next door and if you don’t want to live next to your investment, but the house behind you
· Buy within 800 metres of a train station
· Buy 70% value in the land
· Buy on not less than a 4% yield
· Buy a home unit in a location that is not dominated by units and in a small well maintained complex
· Renovate your own home
· Decide not to buy no matter what
In any event, the talk is turning to property once more – I hope this at least gives you something to say when you are in one of these property conversations.
Remember, when it comes to property, we are all experts because most of us own one, and it’s always been said “never take advice from someone who hasn’t done it before.”
Imagine what you could do in this market with a little bit of sound knowledge gained from much experience, especially when most are acting by some other means.
11 March 2010
"Homes under $500,000 near the city were in demand, but top-end sellers weren't seeing the same level of enthusiasm. That (mid) market is red hot; absolutely booming. Above that (buyers) have time to kick the tyres.
"We will see a rise in medium prices but it doesn't necessarily mean there's an increase in overall value. The current residential property sentiment in Perth as 'cautiously optimistic', after having been 'depressed' just 18 months ago.
"The emotional aspect is on the way up. Euphoria comes next."
21 January 2010
"Lending to developers throughout 2009 was down 25 per cent on previous years, leading to fewer lots coming to market and adding to pressure on the median price.
"We know there's been a significant drop-off in developer finance but it hasn't shown up in finance across the board. We've also had a drop-off in investor finance as well.
"With interest rates rising among falling demand for loans, that will force banks to be more competitive again later in 2010, buy that gap in lending that we had in 2009 is going to show up in 2010 as a shortfall of stock coming through the market.
"At the start of 2005 we started selling more lots than we were creating, and it took 18 months to fix that, and that caused our boom. At that mid-point through 2009 again we started selling more lots than we were creating, so we're already in undersupply mode and that's not something that can be fixed overnight.
"Off-the-plan purchases or those earlier in the buying cycle were exacerbating median price pressure from the shortage of available credit.
"A lot of the small developers who are developing townhouses, duplexes and villas, the two-to-10 unit developments in the suburbs that are usually bought by owner-occupiers or people downsizing, a lot of that stock is now starting to sell off-the-plan, so really what's happening is we're buying tomorrow's stock today.
"We've got a looming shortage already and today's buyers are already buying tomorrow's stock. You can't keep buying tomorrow's stock; at some stage crunch time has got to come."
13 January 2010
"People are buying tomorrow's properties today as sales off the plan increase in 2010.
Owner occupiers and investors are seeing that price pressures for both the cost of land and to build the new developments are increasing and by the time these developments are completed, their costs will be even higher.
It is important to note that it is not only investors but also owner occupiers who are buying these properties as this shows a healthy market balance.
In most instances, it is 'home grown' local villas and townhouses in the suburbs with developments ranging in size from two to ten dwellings where this trend is mostly occurring.
It has been the shortage of finance through 2009 to the smaller developer which has caused much of this to now occur.
This factor, combined with the normal upswing in a recovering market, will cause a double impact on the price of these properties through 2010.
So when tomorrow's properties run out for today's buyers, there is scope for prices to rise significantly."
[Return to top]
Hegney Property Advisers are Licensed Buyers Agents who work on behalf of the buyer. We undertake to search, negotiate and purchase the best property available.
