Whilst 2020 has been a year of uncertainty, challenge and risk adversity, there have also been pockets of opportunity disguised as a silver lining, helping to introduce some overdue positivity in some industries.
One such example is the Western Australian property market, which has navigated the year with optimism and resilience, creating a market of opportunity for savvy investors looking to seize the moment and take advantage of an investment bubble.
What makes Western Australia that such an attractive investment for investors? How can investors plan to enter the market at an ideal time before increases in housing values? And why is now the time to scour the market for the perfect property?
We’ll answer all of these, and more, below in our article on why now is a prime time to invest in WA, and more specifically at Halcyon Apartments in Subiaco.
The resilience of Perth property
In the wise words of John A Shedd, “A ship in harbour is safe, but that is not what ships are built for.” Using this analogy, if we think of the Ship as the Perth property market, and label the ebb and flow of the Ocean as the 2020 global pandemic, you could say that the property industry has navigated the turbulent year with resilience, creating a perfect storm of opportunity for investors to snap up bargains ahead of the forecasted property value growth curve.
After all, the West Australian property market experienced one of its largest-ever booms to date following the Global Financial Crisis of 2007, with economies bouncing back bigger and better despite a periodical moment of uncertainty.
If we take a closer look at some of the metrics within the property market, it’s clear to see that this trend is likely to continue over the coming months.
The Perth rental market
Perth is currently experiencing its lowest vacancy rate in 13 years, sitting at just 0.96%. In fact, it’s only the third time in 40 years the vacancy rate has been below 1%. Further to this, the world’s most isolated city is also on track to surpass its all-time lowest vacancy rate of 0.8% over the coming months, a record that dates back to March 2007. June quarter figures from REIWA have also revealed that stock levels are around half of the usual amount when compared to last year.
Whilst property managers across the Perth suburbs are labelling the current period as a “rental crisis” for would-be tenants, it is a period of immense opportunity for investors to build their portfolio ahead of the predicted growth curve.
According to a recent PerthNow article, rental prices are expected to surge by as much as 20% in March when the emergency ban on rental increases will be lifted. The article also goes on to say that rents are already rising by 10-20% in newly leased properties, so the 20% forecast could even be considered a “modest” estimate.
Blend this with the increasing shortages in available stock, and you have a prime market for generating strong rental returns in a highly competitive and buoyant market.
WA’s booming natural resources
When the Coronavirus pandemic struck the world and communities began retreating into lockdown, all eyes turned to Western Australia as a shining example of how to successfully contain community spread. This has contributed to the state coming through the virus relatively unscathed, with promising signs of the economy not only recovering but thriving despite the year of uncertainty we have experienced.
As reported in this article, the forecast for the WA economy over the next 12 months is set to the best year for the property market seen in nearly a decade – all thanks to our state’s booming natural resources.
We take a look at some of the recently reported quantitative data which showcases the WA economy in an encouraging light:
- WA’s resources sector just reported record sales of $172 billion for the 2019-20 financial year.
- Iron ore prices have surged to the highest they have been in 8 years, totalling a record $103 billion in revenue.
- While gold sales have also soared to new record highs, bringing in an additional $16 billion to the state economy.
- Nickel sales are experiencing the highest level of sales in four years, injecting a much needed $3.1 billion for the local economy.
- Mineral exploration expenditure has risen by 17 per cent from $1.4 billion in 2018-19 to $1.7 billion in 2020
- Oil sales have also increased to $2.6 billion thanks to higher volumes and a further contribution towards our growing economy.
According to a recent WA Today news article, Western Australia has recorded an additional $2.3 billion in iron ore revenue since the pandemic first hit, generated mostly from booming commodity prices originating from Chinese stimulus spending.
When Managing Director of Nu Wealth, Daniel McQuillan, was recently asked about some new activity in the mining sector, he revealed, “BHP recently announced that it will create up to 1,250 new apprenticeships in Perth as part of an $800 million skills and technology package to be rolled out over the next five years. In another boost to the economy, companies like BHP are also now requiring interstate workers to permanently relocate to Western Australia”.
Encouraging signs of activity that will substantially contribute to the booming WA economy, which is likely to lead to sizeable improvements in housing values.
What does this mean for investors? Now is the time to acquire property at highly affordable prices ahead of price hikes.
Government Assistance is still available
Thanks to the assistance of the State Government, investors who purchase an off the plan apartment. Halcyon Apartments are eligible for up to $50,000 off the price thanks to the 75% Stamp Duty Rebate.
To add to this further, Halcyon developers, Celtic Properties are also providing their own rebate assistance on the remaining 25% of stamp duty, which entitles investors to further financial support up to the government’s threshold of $50,000. That means you have no stamp duty to pay on your apartment purchase.
If that wasn’t enough of a motivator, it’s never been a cheaper time to borrow money. As of the 3rd of November 2020, the Bank of Australia (RBA) reduced its cash rate to just 0.15% as reported on the RBA Rate Tracker.
Green shoots and growing demand
Inner-city suburbs like Subiaco have become a haven for investors given the mining and construction boom, aforementioned vacancy rate and the trend of interstate and international investors seeking opportunities in the West, driving up demand in the local market.
According to articles like this WAToday feature on the Perth apartment market, it’s been a year of growth and opportunity for properties in the West, with a Senior Research Analyst at Domain, Nicola Powell, recently commenting,
“The thing with Perth I find interesting is we’ve seen the bottom of the sales market. There’s green shoots coming out of the sales market. The hard border closures that WA have experienced and other states and territories have has really changed the dynamics, particularly of the rental market.”
This has created the perfect opportunity to snap up bargains in the market, as demand for centrally located apartments continues to rise.
Subiaco is the place to be
As we recently explored in our article Subiaco – an oasis of lifestyle, sophistication and community, the vibrant offering of the local area presents fruitful opportunities for investors. Not only does the famed 6008 suburb have the benefit of a central location with an abundance of local landmarks and recreational opportunities, but there are also a series of development projects in the works that will increase property values over the coming years.
Some of these examples include the newly launched Bob Hawke College, the Subi East Redevelopment and the future rail station that is scheduled to link Subiaco directly with the Perth Airport – we cover some more examples in our article The Rebirth Of Subiaco.
The Halcyon Apartments can best be described as the best value apartments in Subiaco, opening up the potential for savvy investors to acquire a boutique, central apartment in a suburb on an upward growth trend, at the perfect point of the property market cycle.
Register your interest today!
The time is ripe to take advantage of Perth’s current market conditions, and if you’re considering an investment in Subiaco, the Halcyon Apartments present the perfect opportunity.
Our team can walk you through the various configurations on offer, as well as the stylish apartments available from as little as $339,000. We can walk you through the options for projected rental returns and guide you on your investment strategy given the current marketplace.
We welcome you to register your interest today to begin the conversation.