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Capital growth focus for investment advice group

PROPERTY investment advice group Property Buyers Bureau has found a secure niche in the property market just 18 months after setting up shop in Perth.

The bureau, which guides home buyers through the many pitfalls of the property market, is linked to valuation firm Hegney Property Group. It was established after the valuation arm of the organisation encountered increasing numbers of home buyers who had paid too much or bought the wrong type of property or in the wrong area.

Property Buyers Bureau  managing director David Devenish said that as choice of properties to buy became more varied and people became more sceptical about sales advice given to them, increasing numbers of Perth investors were looking for independent advice.

Reflecting this, the group has grown from a staff of just one to six.

Mr Devenish said the organisation primarily assisted investors and first-home buyers find the right property for the right price to give long-term capital growth.

Not all investors are interested in capital growth, however, and Mr Devenish believes that the investment trend of chasing rental yields rather than capital growth could cause problems for investors in the future.

Driven by the affordability factor, many investors are looking to outlying suburbs up to 25km from Perth.

While property values in some of these suburbs have increased dramatically over the past two years, Mr Devenish said he had concerns that, when investment activity dropped off in these areas, property values would revert to their normal low capital growth rate.

Much of the investment activity in these areas has been driven by first-home buyers and investors looking for cash-flow-positive investments, he said.

“There has been a lot of media commentary and information around about cash-flow-positive investments,” Mr Devenish said.

“However, today there are fewer and fewer cash-flow-positive investments around.”

The danger for investors is that the rise in property values may be unsustainable when investment activity drops off.

Mr Devenish said property buyers investing in traditionally low-capital-growth areas needed to look at what sort of demand would replace the current investment demand in the future.

He suggests that, in these areas, there won’t be the same level of owner-occupier demand to replace the current rate of investment activity that is driving up values.

“Many people are buying properties without proper research and will find in the future that the property will not be worth much more than they paid for it,” he said.

While not suggesting investors overlook purchasing in outlying suburbs, Mr Devenish said people needed to think about what would drive future capital growth.

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