PERTH HOUSES ON THE RADAR FOR INTERSTATE INVESTORTS

 

Real estate agents in Perth are reporting a spike in inquiries from interstate and overseas, with data seen by the ABC showing 30 per cent of searches for properties in the western suburbs on one major real estate website came from outside the state last month.

Agent Justin Davies recently sold a unit in the Perth beachside suburb of Cottesloe for almost $1.2 million.

The property sold after less than a week on the market.

"The people who bought it were from New South Wales. They bought it for the full asking price, sight unseen," Mr Davies said.

The Cottesloe-based agent said he noticed an increase in sales inquiries from Sydney and Melbourne towards the end of last year — a trend backed up by online search data from a major property website. 

"Thirty-one per cent of inquiries for western suburbs property at the moment is coming from the eastern states or overseas," Mr Davies said.

"That's significantly more than what it would have been 12 months ago. It would have been a third of that."

Mr Davies pointed to a number of factors driving the renewed interest in the Perth market, including a modest recovery in the mining sector.

"There's a lot of people from Perth that moved to Sydney ... coming over and saying, look, we're coming back in six months to two years and we want to buy our family home, and we think now is the time to buy."

"They can cash out over there and they can buy really well here and they feel the market's on the increase here."

Properties in the $1 million to $2 million range were of particular interest to investors, Mr Davies said, along with family homes selling for up to $5 million. 

"It's never happened before that Melbourne and Sydney have had a great run and Perth hasn't had that happen six, 12, 18 months later," he said. 

"It's just taken a little bit longer this time.

"The number of phone calls, the number of emails, both locally and from the east is reaching higher levels than we've seen for quite a few years."

 

Lending rules may curb sales

Real Estate Institute of WA (REIWA) president Hayden Groves said there were encouraging signs in the Perth housing market, but it was premature to expect a big lift in investment from outside WA.

"I'd be surprised to see a flood of investment from the east coast any time soon. It could be that we start to see it build slowly over time," Mr Groves said.\

"Certainly once transactional activity starts to improve and the median house price does start to move forward, it is somewhat inevitable that we'll see an immediate impact in the Perth market more broadly and we will see prices, in real terms, start to rise."

A report by CoreLogic-Moody's Analytics, released earlier this week, forecast Perth house prices will rise by 2.8 per cent this year and 1.4 per cent in 2018. 

Apartment prices are tipped to jump 5.6 per cent in 2017 and 1.4 per cent in 2018. 
Mr Groves said soaring prices on the eastern seaboard were making Perth's housing market more attractive to investors.

"The yield on your investment, in Sydney, is actually quite poor now because land values have increased so much," he said. 

"If you're looking at Perth, the yield is amongst the best in the country."

However, Mr Groves said tighter lending criteria imposed on the major banks by the Australian Prudential Regulation Authority (APRA) for investor loans may curb any lift in activity.

"We're hopeful the banks will make a differentiated decision when they're considering offering an interest-only loan to an investor who's buying in Sydney in an overheated market to somebody that's looking to acquire property in a market like Perth."

"Certainly second-tier lenders have got a lot more flexibility in relation to who they can loan to and the criteria by which they can loan.

"If the big banks aren't going to play and allow [investors] to access those funds, then they'll definitely look at second-tier lenders."

REIWA is also forecasting a small increase in the Perth median house price in 2017.

Original Source: http://www.abc.net.au/news/2017-04-12/perth-houses-on-the-radar-for-interstate-investors/8440362