A Tax Depreciation blog by Paul Bennion.

With offices throughout Australia, our company is in a strong position to track current and well as future trends in the property investment market on a local basis.

Perth is one market property market that has struggled over the past year due to the downturn in the resources sector.

That trend is reflected in weakening property prices with the median house price in Perth falling by 6.3% over the past year. In contrast, most other capital cities in Australia have achieved positive growth in property values during this period.

However, there are signs that the Perth property market has bottomed and there could be an upswing in demand from first home buyers driven by the growing affordability of homes in the city.

The significant falls in Perth property prices over the past year have meant that first home buyers in Perth can now take out lower home loans to purchase a property.

For example, ABS lending figures shows that the average size of a first home loan in WA was $320,800 in March 2016 compared to $342,800 in March 2015.

Overall, the average size of a first home loan in WA has gradually fallen from a peak of $348,800 in May 2015.

Compared to other States such as NSW, first home buyers are now in a much stronger position to buy a home because their borrowing costs are much lower.

In NSW, where the property market is much stronger, the average size of a first home loan has actually increased from $365,700 to $380,200 over the past year. The average size of a first home loan in NSW is now nearly $60,000 higher than in WA.

This affordability combined with the added incentive of falling interest rates should mean that home buyers will underpin activity in Perth property market moving forward. This in turn will have a positive flow on effect for the rest of the market.

At the same time, DEPPRO is also recording growing activity by eastern states investors in the Perth property market.

These investors, mainly from Sydney and Melbourne, are using the wealth they created in the recent housing booms in both those capital cities, to buy more affordable investment properties in Perth.

It might surprise many people to learn that you can now buy a standalone house in some areas of Perth for under $300,000 – such as been the market correction in that city.

Tips for Buying a Perth Property

  • Traditionally, in the Perth market properties that are close to the CBD, ocean and river have outperformed the overall market.
  • Focus on areas that will benefit from major new infrastructure i.e. new Burswood Stadium and the proposed Forrestfield railway station.
  • The growing expansion of Perth means that homes close to public transport hubs or close to the city will become more attractive to property buyers moving forward as traffic congestion increases.
  • Focus on well located areas where the median house price is below $400,000. When the Perth property market begins to recover, property values in these underpriced areas should quickly rebound.
  • Beware of buying into a location where there might be an oversupply of homes. For example, the inner city apartment market is now in danger of becoming oversupplied and this could drive down prices.