LESS than 10km from the CBD or beach? Check. Under $550,000? Check. More than one bedroom? Check. Why wouldn’t you want to live in Perth?
The nation’s west is emerging as the best spot for first home buyers who want more bang for their buck, as Perth property prices continue to ease with the downturn of the mining boom.
The median house price in Perth was down 2.7 per cent to $535,000 in the March quarter, according to new Bendigo Bank-Real Estate Institute of Australia figures, while Australia’s median house price climbed 2.4 per cent to $658,608. Sydney’s median house price is $929,800.
WHY SHOULD I BUY IN PERTH?
A three-bedroom house with a garage in Burswood, five minutes from the CBD, is listed from $529,000 — less than what you’d get for a tiny one-bedder in Sydney’s Pyrmont or Haymarket.
“We’re running counter-cycle to the east coast, meaning that we’re in a bit of a downturn at the moment while the east coast prices are rocketing. It’s a buyer’s market in Perth right now,” said Debra Goostrey, chief executive officer of the Urban Development Institute of Australia’s West Australian branch.
“There are some good places in and around 10km of the CBD if that’s where you’re working, but there’s lots of employment nodes well outside the CBD as well.
“Although (the West Australian economy) is a little more subdued at the moment with the mining downturn there are still plenty of job opportunities. Perth’s economy is growing well and our employment rates are good.”
After land supply problems sent Perth property prices skyrocketing during the mining boom a decade ago, the city was forced to diversify housing types, with the focus shifting from mega homes to smaller houses and apartments. But big, new, masterplanned communities well outside the CBD, such as in Baldivis (46km south of Perth CBD) and Ellenbrook (21km northeast), are still popular with first home buyers.
“Perth is going through the transition that happened in other states a while ago, where we’re densifying our inner- and middle-ring suburbs,” Ms Goostrey said.
“Some of the properties are older but we’re seeing new townhouses and other types of dwellings cropping up all over the place, so there’s activity everywhere rather than in one particular location.”
She also said Perth was experiencing a cafe and small bar renaissance which, coupled with its increasingly vibrant night-life and inner-city laneway culture, could offer a taste of home for those venturing out to the far-flung western capital.
Steve Jovcevski, property expert at comparison site Mozo, agreed Perth was the top spot to consider. You don’t only get more for your money now, but also in the long run.
He pointed to suburbs like Joondanna, which is a short drive from the city, and where you can get a three-bedroom house for less than $500,000.
“After 10 or 15 years, being only ten minutes from the city means in the long term you’re never going to lose on that investment,” he said.
Slightly out of the city, the most affordable middle-ring suburbs in Perth are Koongamia (median house price of $375,562), Gosnells ($385,064), Stratton ($388,207), Maddington ($389,031) and Lockridge ($392,684), according to April figures from RP Data.
The cheapest middle-ring suburb for a house in Sydney is Birrong at $644,349.
WHERE ELSE ARE PRICES DROPPING?
Perth isn’t the only capital city worth considering moving to for the budget-conscious buyer.
Brisbane is the other city where house prices are falling, down 1.5 per cent to $475,000 in the Bendigo Bank/REIA report.
RP Data says the five Brisbane suburbs with the lowest median housing price are Gailes ($246,078), Woodridge ($269,186), Wacol ($291,153), Inala ($312,010) and Archerfield ($320,495).
Mr Jovcevski described Brisbane as a “fundamentally good” choice, as long as you avoided flood zones.
“Chermside is about 10 or 15km from the CBD and it’s got good transport links, employment hubs, it’s close to schools, and those things are also important wherever you buy,” he said.
While property powerhouse John McGrath earlier this month talked up buying on the Gold Coast, where he said buyers could “live a multi-millionaire’s lifestyle … without being a multi-millionaire”, Mr Jovcevski is not so sure.
“The problem with the Gold Coast is that it’s a very up-and-down market, and it probably is increasing at the moment but it can also decrease dramatically because it’s relying more on holiday accommodation,” he said.
While Mr Jovcevski recommends investing in land, rather than units, prices for dwellings other than houses are also easing in the nation’s capital.
There has been a 2.5 per cent fall in prices for these dwellings in Canberra, where Tony Abbott’s daughter Louise is among the buyers benefiting from a cooling housing market, following widespread cuts to public service jobs. There, the median price for other dwellings is $407,250, significantly less than $615,547 in Sydney.
WHAT IF I DO WANT TO MOVE INTERSTATE?
If you’re thinking of buying interstate as an owner-occupier, Jovcevski said you should get familiar with the local stamp duty costs and council rates, which differ from city to city. You should also consider investing in land, rather than units, to get a better long-term return on your investment.
And whatever you do, don’t be blindsided by Sydney’s skewed real estate prices.
“Don’t think about Sydney prices and make sure you do your research so that what you’re buying is worth market price,” Mr Jovcevski said.
“Quite often if you’re out of state there might be real estate agents looking to take advantage of you because you don’t know the market and you’ll be paying an inflated price.
“Never buy without looking at the property, and look at what the recent sales are. In most places, other than Sydney, the prices are fairly stable, so you can get a good idea of what it’s worth if you look at the last three months’ sales history. With Sydney that seems blown out the window.”