Western Australia Property Report
National Overview This quarter, we asked Herron Todd White property experts to identify the hidden gems of Australia s residential property market locations that combine affordability with strong prospects for future growth. As our research confirms, it is still possible to find such property jewels, and a few leading indicators can pinpoint where to look. NEW INFRASTRUCTURE DEVELOPMENTS In Sydney s north-west growth corridor the construction of a new business park and infrastructure improvements have the potential to underpin healthy long-term price growth in the Macquarie towns of Richmond and Windsor. At present, dwellings in these locations are available for under $500,000....values in the Brisbane suburb of Salisbury have the potential to rise following major works... In the South Australian capital of Adelaide, West Croyden could be a key beneficiary of the Royal Adelaide Hospital, due for completion in about 2016. Already the suburb is benefiting from new local infrastructure, including shopping centres and bikeways. The median house price in West Croyden is $470,000. In Queensland, values in the Brisbane suburb of Salisbury have the potential to rise following major works, both planned and under way, in nearby Mt Gravatt. Entry-level dwellings in Salisbury are priced from around $450,000. LARGE ALLOTMENTS Large lot sizes can be another factor indicating potential hidden gems. To Sydney s west, generous lot sizes in Blacktown and Penrith are proving attractive to investors hoping to construct a second dwelling. A similar pattern is being seen in the Perth suburb of St James, where large allotments give investors the option to tenant a dwelling while planning for duplex development of the land. 2
THE RIPPLE EFFECT The ripple effect, where rising property prices spread outwards from one suburb to neighbouring areas, can be a marker of hidden property gems. In Melbourne, for instance, Altona North has a median dwelling value of $560,000. Yet nearby Williamstown enjoys a median house price of $959,000, and neighbouring Newport has a median house price of $740,000. The price differential gives Altona North plenty of scope for future gains. In Tasmania, the ripple effect of rising prices in inner Hobart locations could pinpoint Moonah as a potential hidden gem. The median house price in Moonah, situated just 4 kilometres to the north of the city centre, currently stands at $279,500. GOVERNMENT INITIATIVES In the Northern Territory, the government s Real Housing for Growth plan gives investors a guaranteed rental cash flow. At present, property is available under the scheme in Coconut Grove in Darwin s north and in the satellite city of Palmerston. Properties in these areas are priced from about $420,000. LOCAL IMPROVEMENTS The Canberra suburb of Narrabundah is well placed to benefit from the development of the Kingston Foreshore waterfront precinct combining arts, cultural, recreation and dining facilities, on the edge of Lake Burley Griffin. Medium-density housing options in Narrabundah start in price at about $350,000. The ripple effect, where rising property prices spread outwards from one suburb to neighbouring areas, can be a marker of hidden property gems. The list of hidden gems identified in this edition of the Herron Todd White Westpac Property Report is by no means exhaustive but we hope it provides food for thought on where to look for your next investment property. Brendon Hulcombe CEO - HERRON TODD WHITE 3
Western Australia Investors in Perth have a healthy choice of locations that offer relative affordability backed by strong capital growth potential. ST JAMES Located just 9 kilometres from the Perth city centre, the suburb of St James boasts established infrastructure, including frequent bus connections to the CBD; a broad selection of local primary and secondary schools, both public and private; and proximity to Curtin University and the nearby cafe, restaurant and retail precinct of Victoria Park. Housing stock in St James can broadly be described as basic in nature, and a purchaser may need to allocate funds for an upgrade of the dwelling prior to tenanting. However, 3-bedroom homes are commanding weekly rents of about $420 to $450, giving a gross rental yield in the order of 4%, which in itself is healthy for a metropolitan location. Moreover, homes in St James are affordable, typically priced at around $550,000 to $600,000, which compares favourably to the neighbouring suburb of East Victoria Park, where prices are in the order of $650,000 to $700,000. A key point of appeal of St James is the suburb s large lot sizes, which provide investors with an opportunity to purchase a property with a dwelling that can be immediately tenanted, while planning for the duplex development of land. As a guide, an investor could subdivide and sell the rear vacant lot for a short-term return, or add value by constructing an additional dwelling on the rear lot. Housing stock in St James can broadly be described as basic in nature, and a purchaser may need to allocate funds for an upgrade of the dwelling prior to tenanting. Although property values in St James are expected to remain stable in the short term, capital growth of 5% to 10% is expected over the medium to longer term. CLAREMONT Claremont is an established location in Perth s western suburbs and as such features quality infrastructure, including a high frequency station along the Perth-Fremantle train line; Claremont Quarter Shopping Centre and the adjacent retail strip of Bayview Terrace and St Quentin Avenue; and public and private schools, including the prestigious Scotch College and Christ Church Grammar School (both for boys) and John XXIII College (a co-ed Catholic school). Other facilities include public parkland, Claremont pool, Lake Claremont Golf Course, the Royal Agricultural Society Showgrounds and Claremont Oval, home of the Claremont Tigers WAFL football team. 4
Indeed, Claremont Oval is currently enjoying a multimillion-dollar revamp, and the grandstand and football club facilities have been demolished to make way for a complete redevelopment of the ground. When it is finished, the Claremont on the Park project will include new club facilities and grandstand as well as residential apartments and medium-density dwellings. Mirvac and Georgiou Living have dwellings for sale and under construction at Claremont on the Park, with prices starting at about $485,000 for a 1-bedroom apartment. Rents will be established on completion but we expect them to be in line with the market, and gross yields are likely to be in the order of 4%, backed by generous tax depreciation allowances associated with new properties. The wealth of nearby facilities makes this development an attractive proposition for investors and tenants also. Broadly speaking, capital growth in Claremont is expected to be up to 10% over the longer term. AUBIN GROVE The new suburb of Aubin Grove lies in Perth s southern corridor close to the established infrastructure of the Kwinana Freeway and the Perth Mandurah rail line. Aubin Grove is dominated by new homes. Many are priced from $550,000, with rents in the order of $550 per week. Local infrastructure continues to expand from the current facilities of Aubin Grove Primary School and medical centre as well as local parkland and playground facilities. However, there is no train station at Aubin Grove at present. Work on a rail link is scheduled to commence in the next few months, with completion due in late 2016, and the development of this link is supporting local property price growth at higher levels than for neighbouring Hammond Park. Aubin Grove is dominated by new homes. Many are priced from $550,000, with rents in the order of $550 per week. We anticipate capital growth of 5% to 10% over the medium to long term for good-quality homes. 5
Regional Western Australia SOUTH BUNBURY South Bunbury has recently experienced important zoning changes, which are encouraging higher-density developments. This is having a significant impact on the local property market as it means that single-dwelling properties on lot sizes of 700 to 900 square metres have duplex or triplex potential. Not surprisingly, this has underpinned growth in local property values, which is being further enhanced by ongoing gentrification. South Bunbury offers proximity to Bunbury CBD, the ocean, schools and a wealth of local medical facilities. The current median house price is $430,000. BUSSELTON Another potential investment hotspot in the state s south-west is the coastal strip on the north side of the Bussell Highway traversing the suburbs of Busselton, West Busselton, Broadwater and Abbey. This coastal strip is approximately 500 metres in width and runs for approximately 10 kilometres along Geographe Bay. Gross rental returns in this area can be comparatively low. However, as the City of Busselton continues to grow, this limited and well located strip of land will continue to become more desirable and affluent over time. This in turn should support strong capital growth over the medium to long term. The recently completed Busselton Hospital will also prove attractive for retirees relocating from rural holdings in the south-west to coastal suburban dwellings, and this is likely to provide a further foundation for capital growth. 6
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