How is the Perth Apartment Property Market Changing in 2017?
Little has changed in Perth’s housing market since the beginning of 2017. Residential property values sit 6% below the same time last year, and sales over the Easter and ANZAC break have done nothing to buck this trend. Combined with the slow in population growth, the slew of newly completed residential properties seems to have continued to cause problems for landlords in and around the city centre, leaving the overall vacancy rate at 6.5% as of March 2017.
Rental rates have not improved
According to REIWA members in April, the number of properties available for rent is 6% higher than the same time last year and 2% higher than four weeks ago. We’re still seeing a lot of choice available for quality tenants, and many landlords are dropping rates to incentivise existing tenants to renew their lease.
Unemployment still putting the squeeze on
While the national unemployment level rose 0.2% from January to February this year, Perth saw a drop from 6.4 to 6%. However, the pain isn’t over, with many of those who were on mining high incomes struggling to make repayments on their homes. This will possibly see some selling their residential property and others renting their property out to help make those payments, further increasing the competition for tenants amongst landlords of Perth property investments.
Stricter loan conditions could be discouraging buyers
Since the beginning of the year there have been interest rate hikes from most of the big lenders. Add to this the tightened restrictions for interest-only loans and investors by ASIC and APRA, and things aren’t looking bright for many potential investors at the moment. This is likely to keep many renters from leaving the rental market and making their own purchases, which is some redeeming news for those already with a Perth property investment in the city.
Will the RBA change the cash rate change in May?
The cash rate has sat steady at 1.5% since July last year to bring back confidence. Many are predicting that the Reserve Bank will make no change to the cash rate in May 2017 prior to the Federal Budget release. Instead, it’s expected that any rise could come later in the year or even in 2018. Housing affordability is likely to be at the forefront of discussion this May, which could impact the Perth housing and apartment market over time.
As always, our Perth property management team is finding high quality tenants for our clients with executive and boutique residential properties. If you are looking for a professional management team for your residential property in WA, contact the Burgess Rawson team today.
Should I Be Investing in a House or Apartment in Perth
The dip in Perth’s property market is starting to offer appealing opportunities for investors looking for a bargain. Perth’s median house price was $515,000 in March this year, down from 525,000 in December last year according to data from the Real Estate Institute of WA. Compared to the property spikes in Sydney and Melbourne, Western Australia’s capital could offer some decent value for the investment dollar.
The driving factors
One of the major factors driving is the downturn in mining in Western Australia, which has put pressure on some mortgages. This dip in confidence has many owners choosing to sell residential property in Perth rather than hanging onto it. Perth metropolitan median sale values are down 1.9% from 3 months ago, and down 4.5% from one year ago. That leads to some interesting properties being made available for purchase, particularly at the higher end of the residential market.
The other factor pushing prices down is the oversupply in the central Perth apartment market. The median unit price in Perth saw a rise of $7,000 to $419,000 from December 2016 to March this year, which could be indicating a return in confidence from investors. It’s still a renter’s market, but for those searching for an executive property to lease out there could be some good properties available before things could start to pick up again.
Sydney market pushing interest in Perth property
Pressure on the Sydney and Melbourne market is helping to drive some investors to purchase residential property in Perth and this may only continue, with NAB predicting a 4.5% rise in house prices for Sydney and a 5.6% rise for Melbourne within 2017. Little that wonder that those looking to sink their cash are heading to a market where they can pick up a three-bedroom apartment in central Como or East Perth for perhaps half the price.
What’s the verdict?
So should you be investing in Perth right now? As always, the answer is going to depend on your existing portfolio, objectives and timeframe for investment. There are certainly some big opportunities for those interested arising in Perth, particularly within a few kilometres of the city centre.
If you are looking for a residential property sale in WA or are simply looking for a stable return in the challenging Perth apartment market, our executive property management team in Western Australia can help you to find quality corporate and non-corporate tenants for solid rental returns.
What Are the Advantages of a Portfolio Auction?
Our portfolio auctions have been developed specifically to assist property owners and buyers to find the perfect opportunity to further their investments. Whether you are looking to get the best price for your investment property at auction or are searching for commercial property for auction, here’s why this selling method is likely to provide the ideal solution.
What are portfolio auctions?
Portfolio auctions are a Burgess Rawson concept based on our early sale and leaseback successes for NAB, Westpac and ANZ leading up to 2001. These differ from other commercial real estate auctions in that the wide variety of properties drive greater attention, competition and therefore prices by potential buyers. The terms for these commercial property sales typically include attractive long term lease arrangements or sale and leaseback offers that suit a self-managed super fund or portfolio investment.
What are the advantages of a portfolio auction?
- The property is marketed effectively
Burgess Rawson portfolio auctions are highly regarded around Australia and internationally, and a go-to destination for buyers looking for their next investment. Your property price benefits from professional marketing to our auction database and targeted audiences.
- They attract a vast investor network
Because we market a range of properties within and beyond our national database, the audience is broadened for every property auction. Our auction database is interested, engaged and often ready to buy, making the optimal conditions for the highest price possible.
- Our portfolio auctions are easily accessible
We keep our portfolio auctions centrally located in inner city locations and they are carried out by an award-winning auctioneer. Live interstate bidding is available from Burgess Rawson’s Melbourne, Brisbane, Canberra and Perth offices, and overseas bidding can be arranged.
- Commercial property sells optimally at auction
There is plenty of evidence that points to auctions as gaining the highest price for commercial property. We’ve achieved close to $10 billion in sales at our portfolio auctions since 2001, obtaining outstanding prices for childcare centres, service stations, office spaces, restaurants and medical precincts amongst other property types.
- A portfolio auction provides flexibility and confidence for buyers
Our auctions are widely known and respected to investors who keep an eye on our property listings for the perfect opportunity. Investors will often request multiple contracts on similar investments in case they miss their first choice of property, opening up further demand and new opportunities for those selling.
View our current portfolio auction properties now, or contact the team to begin marketing your property for auction.
What is a WALE and What is it Good for?
WALE, or weighted average lease expiry, is an important term within the world of commercial property. But what does the term mean, and when should you pay attention to it? If you’re looking to purchase a property with multiple leases, it’s worth finding out.
What’s a WALE?
In a property with various leases of different lengths, assessing market risks can be complex. The weighted average lease expiry is used to indicate the average expiry period of all the leases within a property. This figure enables you to more clearly assess the current and future income stream that the property will provide.
How is the WALE calculated?
A property’s weighted average lease expiry is calculated based on the length of all leases within the property, but it is also weighted in terms of individual tenants. This may mean the WALE is adjusted according to each lease space and how much this accounts for within the property, or how much the rental payments contribute to the whole income from that property. A large leased space with a longer term, for example, may help to mitigate the risk of several small spaces with shorter leases.
Why it’s important to pay attention to the weighted average lease expiry
Depending on what you intend to do with the property as the owner, investors generally look for longer WALEs. A weighted average lease expiry of five years indicates a stable tenant base and high satisfaction. A WALE of just a few years can indicate a shorter turnaround amongst tenants, with extra potential costs involved in managing and minimising those turnarounds. If the rental market is currently on a downswing in the area, then a short-term WALE could indicate some risk that part (or multiple parts) of the property could lie vacant for some time. It can be significantly easier to sell commercial property for a good price if it has a lengthy WALE, and two properties in the same area that are very alike can fetch very different prices if their WALEs are drastically different.
When is a shorter WALE a good thing?
It’s not all bad news if the WALE is a shorter term. If you’re looking to upgrade or add to the property in the next few years, shorter leases can actually provide the chance to make improvements, renegotiate lease agreements and position that property within in a higher rental return bracket.
Ultimately a long WALE is going to be a compelling selling point in any property auction or private sale of commercial properties for lease. As with any investment, you will want to assess the property’s risk and return profile against your objectives before making your final decision.