Most people in Australia, including you, probably have some financial interest in property, and for good reason. It is a tried and tested place to invest your money, grow your wealth and achieve financial freedom. Property is statistically a far safe place to have money than the stock market on along running average, and typically rides out the storm much better than stocks in times of economic crisis. In uncertain times like these, it is very important to make informed decisions about where and why you are choosing to invest in and develop property in Australia. If you make the wrong property investment and development decision at the moment, you will lose a lot of money. On this section of the website, you will learn why Perth is a going to be the best place within Australia to invest in and develop property in Australia for the foreseeable future.
The majority of Australians are familiar with the phrase “safe as houses” meaning many have a significant proportion of their wealth tied up in property. This is either in the family home, investment properties or through superannuation funds. In fact, the enormous total book value of Australian Property means Australians are regularly listed in the top 3 countries for wealth per capita. Most Australians look at property as a long term wealth accumulation strategy, relying on capital growth through a buy and hold model.
To begin with, growth in the property market for each major capital city is cyclical, with most capital cities in Australia experiencing 7-10 years of growth followed by 5-10 years of market retraction. You need to know where in the cycle your capital city is in its growth cycle; it is either in a growth phase headed to a peak, or its at a peak about to head into a value contraction phase to a bottom (loss of value). If you get the timing wrong of when and where you enter the market, you risk loosing money by buying at the wrong moment in the cycle. Most of the east coast capital cities (Sydney, Melbourne, Brisbane) are at or near peak of growth cycle after many years of sustained growth. These cities are looking at moving into a contraction phase this year as affordability and COVID affected migration hits crisis point, with some experts tipping falls of up to 20% in value in these centers. Perth however is at the bottom of the cycle after a near ten year slump, and is poised to resume the next upward phase of growth in the coming months. Perth should recover from any small falls (modest predictions around 10% for some areas) and accelerate into growth within a year however, driven by;
- minimal reliance on overseas migration to sustain housing demand,
- strong domestic demand for product off the back of stimulus and exceptional affordability,
- a strong and resurgent resources driven state economy (security of supply for asian markets),
- huge latent buyer demand with chronic undersupply of current and forecast housing stock levels (less than 6 months supply on market)
- increase in interstate migration to fill growing needs of undersupplied resources labour market
Property development, a complimentary strategy
Property Development is a versatile and complimentary strategy to simply investing (buying and holding) property in Australia. You can make money by developing property in the short term at most points in the market cycle. Whilst it is great to be developing in a rising market, you dont necessarily need to rely on on capital growth to create equity uplift, because you are value adding in other ways. It is still possible to make money in a flat market, which is where Perth has been for some time. If you focus on getting the timing right however, you can add value through development and compound the returns by letting the market do some heavy lifting at the same time (capital growth in a rising market).
This is what makes the prospect of getting into property development in Perth at the moment so exciting. Perth is the only capital city in Australia currently and perfectly positioned at the bottom of its cycle, about to enter into a growth phase. And its never been more affordable and statistically attractive to enter it. The trick then is getting into a market at the bottom of the cycle, and developing and selling as the market is heading to a peak in a rising market.
There has never been a better time from a buy value perspective in Perth . All the correct indicators exist showing the start of the next phase of growth in the state:
- New resources projects in the mid-west and north-west driving unmet labour demand and wages to levels higher than the last mining boom.
- Rental vacancy rate falling sharply to just over 2%.
- Low interest rates.
- Good future employment prospects
- Most affordable median house pricing against the national average in Australia
- Exceptional affordability index ratings (rent or house price to income ratio).
- Highly competitive building and professional service market, providing value to the property developer.
It is a perfect time to get a property development started in Western Australia. The state is currently headed for a population increase to meet labour skills shortages, an under-supply of housing in key growth areas, and provides exceptional value for money for property acquisition. This is the opportune environment for a property developer to be operating in.
Before committing to doing a development in Perth, many of our customers started by learning the specifics of how to become a successful property developer from us so they dont make mistakes. Spending a bit of time getting the right information, education and guidance from us has given them the developer know-how they needed to make informed decisions about successfully investing and developing in Perth. Developing is slightly different from state to state, and understanding when and where to buy is something you dont want to get wrong, particularly if you are new to the whole process. To learn everything you need to know about property development strategy, principles, and the property cycle in more detail, there are comprehensive chapters and online modules on these topics in our 225 page Infill Property Developer Guide-book and correlating Online Course.