Research is the key to investing in Perth property

The next three months can be a busy time for property investors in WA as they organise their portfolios before the end of the financial year.

Investor activity in the property market has been below average levels in recent times, but this buying group will quickly re-emerge as the housing market stabilises, the state’s population grows, vacancy rates fall and the rental yield increases.

Many potential investors who have been watching the Perth property market, in particular, following the decline in prices since 2010, now sense that it’s an opportune time to look at entering the market. Those in a position to buy are finding good value and great long term prospects.

It pays to do your research

Currently there are around 15,460 properties for sale in the Perth metropolitan area, giving investors sufficient choice in finding the right investment property.

If researching the market, investors should be aware of the key characteristics of successful residential property investment.

The better investments are generally in places where there is consistent population growth, such as near the city or some of the rapidly growing regional centres.

Tenants like convenience so the better investment choices tend to be those which are easy to maintain, have access to arterial roads and public transport and are located close to shops, schools, cafes, tertiary institutions and other community infrastructure. Of course, there can be exceptions to this too so it is worthwhile talking to your REIWA agent.

Local trends and market performance

The ideal investment location is where demand for rental properties exceeds supply, but investors should always balance the entry costs of a new purchase with the return on investment through rent.

Investors ideally look for properties that are affordable, generally at or around the median price, and which have reasonable prospects of good growth in value. reiwa.com's suburb profiles provide median house price information for suburbs and major regional areas which is useful for discovering trends in values.

Often one part of the market will experience higher growth rates that eventually influence neighbouring areas, particularly if they have similar characteristics. This ripple effect can be well worth exploring.

Choosing a property with redevelopment potential can also be considered if that suits your strategy. An investment property that can be subdivided into smaller lots will be popular with some developers but will have to be weighed up in regards to construction costs, rental returns and anticipated resale value.

Property investment is not especially difficult or daunting if you do your research. Talk to your real estate agent about opportunities and always discuss any plans you have with your accountant, mortgage broker or financial planner.