Is now the best time to find bargains at the bottom of the property cycle?
Perth, renowned for being one of the most isolated cities in the world, with an estimated population of 2.04 million- a population which has since spiked, Perth is home to a lot of properties- residential, commercial, anything you can think of. Perth attracted a lot of investors as a result of its mining boom and property prices have been going through a correctional phase with pricing leveling out and coming back to affordable levels. If you believe the time to buy property is at the bottom of the property cycle and not the top then it remains a sound investment, according to a new report – and could be a great time to find some bargains! But are we at the bottom of the property cycle?
Doom and gloom to some, opportunity to others – Price Predictor Index for spring paints a grim view of the city and assessed 20 suburbs as entering the “danger category”. The Index classifies suburbs with sales patterns as rising fast, rising steadily, plateau or consistency markets, but where there is a “marked decline in sales activity” suburbs are classified as in danger.
However, the Joondalup local government area was found to be the steadiest Perth market, with 10 suburbs classified as either plateau or consistency markets. In essence this offers the perfect opportunity to invest as the competition in most suburbs are on a minimal scale due to the decline. It may be wise to get properties around the city now when the prices on a low scale.
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In the east coast capitals, a recent survey revealed there are more cranes building apartments than in major United States cities. With building activity in trouble in Perth, investors are trying to offload their units. Vacancy rates in the Perth metro area have risen 2 per cent over the past two years. After dropping 9.5 per cent over the last year, Perth rents are now at their lowest level since 2011. A downturn in Perth property prices, which have fallen 8 per cent since their peak, is in contrast to strong housing markets in Sydney and Melbourne which appear to be a their peaks. But as history shows, Perth often follows their lead!
With that in mind, now could be a good time to get properties as the prices are low and reasonable and you get the opportunity to negotiate. Also, the number of buildings in Perth outgrow the population thus leaving a lot of options available as the supply is higher than demand. It’s a no-brainer that the best time to buy an asset is when it’s cheap and unloved as that’s usually when the asset provides its best opportunity. This window usually occurs at the bottom of the market when despondency and mass depression rule the day.
Often, it only takes a bit of positive news and some small changes to lift sentiment and the market grows again. Based on this logic, does it mean that Perth is the place you should be looking if you want to maximize your investment return? Quite possibly! It is a well-known fact that the more expensive cities attract the most population as it is believed that more opportunities will be present. So, with that, buying properties in Perth right now could be a wise decision to get in before future market hikes. Real estate offers an array of opportunities, if your thinking of investing, Perth could be the place to be with its ever-increasing population and potentially undervalued properties. It is one of Australia’s fastest growing city and a good ground for future investments.
If you’re looking to invest, the first step is to speak with the right people. Speak with your financial advisor, any real estate agents you may know and first and foremost review your finance options with a qualified mortgage broker.
