Stabilising property prices and strong rental returns have resulted in strong buying opportunities for investors, according to Perth-based mortgage broker House + Home Loans.
House + Home Loans managing director Rael Bricker said investors believe home values in Perth have bottomed out, resulting in a buyer’s market.
“There is a very strong level of investor enquiry and activity at the moment,” Mr Bricker said.
“We as a business have never been busier, with $30 million worth of loan settlements recorded in January.”
Mr Bricker said rising rental yields had been a key driver of renewed investor interest in Western Australia.
Data from the Real Estate Institute of Australia showed median weekly rents in Perth had jumped by 8.1 per cent over the past year, to $400.
Median home value statistics from RP Data also confirm property prices are stabilising, with the median home price contracting just 4.6 per cent in the year ending February 2012.
“Back in 2007 we had a massive spike in property prices – values rose by 46 per cent in just one year,” Mr Bricker said.
“Suddenly properties delivering rental returns of 5 per cent were delivering yields of just 2.5 or 3 per cent, so investors shied away. They couldn’t afford the shortfall.
“Now, there is stability in the market and very strong rental demand off the back of the momentum in resources, with yields back up to 4.5 to 5 per cent.”
Mr Bricker said there were generally three types of property investor being increasingly active in Perth’s market.
“The first group is those buying to build, small-time developers,” he said. “There are a lot of those around and this can be a good way to make a profit, if you know what you are doing.
“the second type is the seasoned investor, who has a number of properties under their belt, but is cash flow constrained – often from over-extending prior to the market correction.”
Mr Bricker said most seasoned investors were purchasing cash flow-positive properties in mining downs in the northern parts of the state.
“Your third type is the traditional investor who is simply looking for property that is going to deliver strong capital growth over the seven to 10 year property cycle.”
