Research released this week from RP Data shows that while Western Australia is known for it’s resources riches, Perth property has enjoyed the second largest return in the country over the past decade, the question is, will it last.
The results from RP Data, which show the average annual change in property values over the last 10 years up until April 2014, reported that Perth property prices enjoyed an average return of 7.6% annually.
When compared to the average growth of Sydney (3.2%), Brisbane (3.7%), and a national average of 4.5%, you can see why investors have been rushing to get into the Perth market.
Is the growth sustainable?
While property prices may keep on climbing, the recent data also showed that with the influx of rental properties on the market rental prices for houses in Perth actually fell by 0.7% over the past 12 months.
The result is that the yield on rental properties is declining as the rise in property prices outpaces rental growth.
What it means for you
If the trend continues it may play into the hands of those looking to get into the property market in the coming months.
The decrease in rental yields may see some of those investors who purchased property at lower prices look to sell and reinvest the proceeds in other asset classes in the search for higher yield.
In addition to this the state government has decided to lower the stamp duty concessions threshold for first home buyers to $430,000 for established houses, effectively pushing this sector of the market towards constructing a new house (for which the cap is $500,000, with an additional $10,000 grant).
These two factors combined could mean that with investors potentially looking to exit some investment properties, and first home buyers no longer incentivised to purchase established properties there may be a softening of Perth property prices.
This is where you need to be prepared
People looking to enter the Perth property market, or upgrade their current property may be able to take advantage of any decrease in prices if there are ready to make their move as soon as it becomes evident.
Having your finances in place, and making sure you are prepared will allow you to make the most out of any temporary decline in property prices.
This is where having a mortgage broker who can make sure everything is prepared for you will pay dividends
To make sure you have everything in place to make the most out of any opportunity feel free to call Peter Hale at Mortgage Choice in North Perth on 0402 252 150 or email firstname.lastname@example.org