|
The month in review: South Western WA
By Herron Todd White
July, 2009
What can $500,000 buy in the southwest of Western
Australia at this time? The answers are a wide and varying
range of properties from apartments to large comfortable
four-bedroom houses, a small lifestyle property or a
vacant seaside blocks. These are all possible at this time
in the Bunbury area. Travel to Margaret River or east of
Caves Road in Busselton and you may also get a new fourbedroom
home on a residential lot.
The interesting point about the above question is that
$500,000 can buy quite a lot in this region as opposed to
a more modest purchase that may be available in a larger
city. The question in the state of WA is further complicated
by the first home buyers discount of no stamp duty
to be paid up to this magic number. This sometimes causes some distortion in the market with competition
for properties under $500,000 being more intense when
properties that are priced slightly over $500,000 can offer
an awful lot more amenities for a relatively small increase
in price.
In this region this particular segment of the market has
been relatively quiet for the last 18 months and it is only
now starting to see some increase in enquiry. This has
made for some excellent buys in beachside residential
communities of new or relatively new dwellings with
above-average quality fixtures and fittings as well as vacant blocks with direct ocean access which have
reduced in price by up to 30%. In our opinion it is likely
that in the longer term the usual forces of supply and
demand and location can only mean these properties are
likely to escalate in value considerably.
The apartment market has been also particularly quiet
but some recent sales have started to come to light (at
reduced values) particularly for those with little or no
outlook. We note, however, that a good rental return is
possible for these apartments due to their locality close
to the CBD with the returns likely to be greater than
on a conventional residence. Whether there is as great
an upside for capital growth in the medium-term is
debatable with these less desirable apartments.
As an investor the question as to whether it is better to buy
one high-value property or two lesser value properties is
always worth considering. With the first home buyers
boost ending, the market for lower priced properties
and less desirable suburbs is likely to be static for quite
some period of time. For this reason it seems more likely
that the more expensive property in the more desirable
locations will provide greater capital growth in the short
to medium term.
In summary, as stated before the market for this style of
property seems to be having something of a rebound with
more interest noted now that has been for a considerable
period of time, as to how long this is going to continue
only time will tell. The most likely drag on the market
would be an increase in interest rates and also the jobless
rate in the area, though these indicators appear relatively
static at the moment for this particular region at least.
|
