Returns available for the ‘astute’

Investors in property shouldn’t expect returns of recent years to continue unchecked, according to Gavin Hegney, despite expectations the market in Western Australia will be among the nation’s top performers throughout 2005.

Speaking at a Hegney Property Group breakfast last week, the group’s chief executive said market activity was likely to be more subdued than previous years because of a change in sentiment.

And while speculation over interest rates continues, Mr Hegney doesn’t expect any rate rise to adversely effect the residential market.

“Banks have been lending people money over the last year factoring in an interest rate increase,” he told those at the breakfast.

“I personally believe rates will rise slightly; 2 per cent doesn’t worry me, but 3 per cent would.”

The Better Cities Living report released by the State Government last year indicated that, by 2013, the Perth and Peel regions would have more than 2.2 million people requiring the establishment of 192,500 new homes, something which can only be positive for Perth’s property market, Mr Hegney said.

“The outlook for all property sectors is strong, but it won’t last forever,” he said.

“Now is the time to review property performance and put gearing strategies into place.

“We believe while the property market will revert to a more traditional historical performance in WA during 2005, there are still significant opportunities for astute property buyers to capitalise on in the property market.

“There are two simple factors that will make you money in property – buy the right property and let time do the work.”

Mr Hegney said several new opportunities for property buyers in the residential market would be created by the development of new infrastructure, as well as changes to government policy relating to the creation and size of building lots.

He added that the commercial property market was attracting a growing level of interest from investors and there remained a significant number of opportunities for buyers in this sector.

The Hegney Property Group is the largest valuation group in WA and is increasingly looking to expand its services to draw upon valuation data to forecast future markets.

Hegney research indicates the top 10 performing suburbs during the past year have been: Trigg (63.6 per cent growth); Coolbellup (44.5 per cent), Chidlow (43.5 per cent); Medina (40.2 per cent); Golden Bay (39.8 per cent); Brentwood (39.2 per cent); Serpentine (36.6 per cent); Calista (36.2 per cent); Mount Helena (33.9 per cent); and Bullsbrook (33.3 per cent).

Builder Dale Alcock told the breakfast gathering that the skills shortage in the construction sector was a major factor that would affect the residential property market in coming years.

“Right now, skills shortages are the handbrake and straight jacket on our industry,” he said.

“We are so hamstrung, because we want to take our business in all sorts of new directions, but there just aren’t the people to build it.

“We are seeing constant time blow outs, particularly in the Peel region, of two to three times what they should be.”

Mr Alcock said the industry was hoping to build 10,000 more homes than it had capacity to build over the next four years, and that finding skilled labour would continue to be a problem unless there were reforms to the apprenticeship program.

St George Bank state manager Martin Barrett said the property market had been “incredible” in recent years, and that the growth had created a number of challenges, including labour and stock shortages.

“We are confident in the property market in WA because there is still strong demand, but the dropping in the eastern states market makes me wonder how robust our market really is,” he said.

“From a banking perspective, we are seeing larger debts coming through, and this isn’t a concern as long as income levels and employment remain high.

“We do recognise the potential for the residential market to slow, but are expecting the commercial property market to do well and are boosting our commercial arm as a result.”