Costs of Purchasing a Property in Perth, Western Australia

There are always 2 main groups of real estate investors whom I have encountered throughout my 9 years of marketing international properties. The first group of investors are those who want our expertise and services to find cash-flow properties as part of their alternative assets portfolio, whereas the second group of investors are those who just want to do-it-yourself (DIY) and find good deals on their own.

 

Regardless which group of those investors belong to, they all have the same set of questions about the costs of buying a property in Perth, Western Australia (for example). Hence, I have decided to spend some money and time in sending out this email to share with you on the costs of buying a property in country like Australia. 

Types of main costs (for example, buying an apartment in Perth, Western Australia):

(A)   Costs of acquisition

 

·        Legal fee – I suggest DIY investors should negotiate the fee with the lawyer.

 

·        Foreign Investment Review Board (FIRB) – as of 2021, this fee has increased.

 

(B)   Costs of settlement

 

·        Stamp duty or transfer duty – take note that foreign buyers have to pay a surcharge of 7%.

 

·        Transfer of title

 

(C)   Costs of ongoing

 

·        Body corporate – similar to our Singapore MCST charges

 

·        Council rate and water rate – these are the annual rates. Note that the water rate is not referring to utility usage. These rates are to be paid by the landlord (i.e. unit owners).

 

·        Personal income tax.

 

·        Capital gain tax (payable when you decide to sell and make a capital gain).

 

·        Property management fee – I suggest DIY investors should negotiate the fee with the property manager.

 

I hope my sharing will help those DIY investors to get the best deals in their own capacity. For those investors who want our expertise and services, we have already done the first part in negotiating good deals with the vendors, lawyer and property management company.

 

Finance options are available. Discover how to unlock your existing equity to secure a new apartment. 

Please call me at 8100 3386 or email me if you need any assistance.
 
Thank you for your kind attention.

I look forward to providing you real estate investment solutions available. 

Stay safe and keep healthy.

Is Perth Property Moving Up or Down? Think Hard Again.

Some investors whom I talked to recently asked me is Perth property having an upward trend or downward trend. To share my opinion with them, I managed to search an article from Herron Todd White (one of the largest independent property valuation and advisory groups in Australia), and the picture of the article in this email was from this website link: https://static.htw.com.au/HTW-month-in-review-February-2021.pdf

Below are some of the key pointers from the article on Western Australian property market for your 2-3 mins reading:

 

(1) Property sales activity has increased 41.3% year-on-year (i.e. Dec’2019 to Dec’2020)

 

(2) Employees in the mining sector required to reside in Perth state to avoid regular quarantine periods

 

(3) Record low interest rates of 0.1% in Australia

 

(4) Record low vacancy rate of 0.8%

 

(5) Median rents up by 8.5% from $350 to $380 per week, all whist COVID-19 protocols result in rents unable to be raised for sitting residential tenants

 

(6) 1000 international arrivals a week expected back into Perth with domestic borders opening up

 

(7) State government avoiding a deficit and forecasting a $1.2 billion surplus in 2020

 

(8) Mining resources such as iron ore price up from USD66.20 per tonne to USD96.60

 

(9) Supply of rental listings at the end of Dec’20 were down 31% from the same time a year ago (i.e. 13,300 properties to 9,167)

 

(10) Given these factors, Herron Todd White team could predict that $500,000 to $1.5 million price range in established suburbs will be a key market segment to watch

Is Perth property going for an upswing or you reckon it is not?

Please feel free to share your thoughts and views in my blog or Facebook page.

I look forward to hearing your valuable insights.

Stay safe and keep healthy.

Opportunity News: 75% Stamp Duty Rebate for Western Australia Off-Plan Apartments

A very good new year to you. Like to share a good news and an opportunity to those investors who keen to invest a cash flow unit in Perth, Western Australia market. Following is the news article from Steve Douglas (Feb, 2020):

"Western Australian Government has announced Stamp Duty rebates of up to $50,000 for all buyers (local and foreign buyers) purchasing off-the-plan apartments in a bid to stimulate the state's struggling property sector, slow construction industry and create jobs. 

How it works: 

v  Available to buyers who sign pre-construction contracts to purchase a new residential unit or apartment in a multi-tiered development 

v  No cap on the purchase price or value of the unit or apartment 

v  Purchasing more than one property will make you eligible for multiple rebates 

v  The discount will also apply to Transfer Duty and Foreign Buyers Duty 

v  Starting effective immediately for the next 2 years (between 23 October 2019 and 23 October 2021)

 

Foreign buyer savings:

Price (AUD)	Current Duty	New Duty	Savings
300,000	29,835	7,459	22,376
400,000	41,015	10,254	30,761
500,000	52,765	13,191	39,574
600,000	64,515	16,129	48,386
700,000	76,265	26,265	50,000
800,000	88,316	38,316	50,000
900,000	100,466	50,466	50,000
1,000,000	112,616	62,616	50,000
1,500,000	173,365	123,365	50,000

 

With the Western Australian economy set to gain momentum with:

 

v  $165B of Mining & Infrastructure projects;

 

v  WA now getting over A$2bn worth of GST top up payments from the Federal Government over the next 4 years; 

v  Population growth improving; and 

v  Vacancy rates on the decline.

 

There has never been a better time to take advantage of the softer market conditions than now, so secure your stamp duty saving before the property market moves into its next growth cycle."

 

Thank you for your kind attention.

I look forward to providing you real estate investment solutions available. 

Stay safe and keep healthy.

Fundamental and Technical Analysis of Investing in Perth Property Market

A very good new year to you.

 

As we enter into a brand new start of 2021, I will like to share my personal thoughts of using fundamental and technical analysis of investing in Perth property market.

 

There are many ups and downs, twists and turns in every property cycle, so regardless of the timing of the cycle, as a long-term investor, you need to ensure that the fundamentals of the property market you want to enter is strong.

 

For me, I will like to look into the followings for fundamental analysis:

 

1)      Population growth rate

 

The first thing you need to find out is whether people are moving into this area for work and living. Local government area usually would release population forecast and actual number of people moving in and how fast it is. Study the population trend and you would have a clear picture of its implications of your investment property.

 

2)      Planning activities by the local, state and federal government

 

Have a good understanding of the city plan that laid down by the local, state and federal government. From the planning activities, you would have an overview of how the land is been used. The keynote of looking at the planning activities is to understand the premium of the land, and that has a strong implication in the purchase price of the property.

 

3)      Supply and demand

 

From the population growth rate that you have found out in point 1, you would be able to determine the demand of dwellings needed. Divide the actual number of people migrating into this area by 4 per household; then divide by 12 months. You would get the supply number in which local government needs to build in order to meet the demand of dwellings needed.

 

I always feel that stock markets and property markets behave one thing very differently, and that is speed. You can press the button on your computer to trigger long/short position of the selected stock within seconds and deal is done. But, for property, the speed of transaction is not within seconds. Hence, by using technical analysis for property investment is mainly to assist us to know the current market sentiment of the location that we want to invest into. However, technical analysis can be difficult due to lack of transaction activities or information.

 

For me, I will like to look into the followings for technical analysis:

 

1)      Auction clearance rate

 

This data showed the percentage of sold properties at auction on a particular week or month. You can use this as a guide to determine the number of buyers and sellers in the market. A high clearance rate generally indicates a growing property market while a low clearance rate may indicate a slowing property market.

 

2)      Days on market

 

This data basically helps the seller to have a good feel of how long it takes to sell a property. Hence, when days on market is getting shorter, you may want to consider to sell off and when they get longer, you may want to hold.

 

3)      Median house price

 

This data gives an indication of how the property market is doing especially where property prices are moving.

 

In summary, start off with fundamental analysis of the specific location and real estate asset type that you want to enter into. After you have zero in the property that you want, proceed with technical analysis. By combining both approaches, I hope it will help you to invest property in a right location at a right time.

 

What is your thought on this?

 

Please feel free to share your thoughts and views in my blog or Facebook Page.

I look forward to hearing your valuable insights. 

Stay safe and keep healthy.

Supply and Demand as Determinants of Price and Value of a Property

There is an old cliché that there are only three factors that determine the value of a property, namely Location, Location, Location. In that sense, where a property is located is more important than what the property is when determining the value. Locations in short supply and with high demand will command high market values.

 

According to Tim Harford, “scarcity and bargaining strength are the driving forces within any market that determine prices, and land and buildings are no different in this respect to other goods and services. Where there is a shortage of supply and high demand, prices are driven upwards.” (Harford, 2007)

 

Given some thoughts on this, I looked at the land use principles in the Central Business District (CBD) or Zone (CBZ). CBD is an area that has the highest levels of accessibility and complementarity. It is a relatively small sized area and demand from users are intense due to the advantages of its location, it will enjoy peak land values. Commercial uses such as offices, retail and certain leisure uses (example, entertainment and exhibition centres) will gather in this area. Hence, the intense competition for space and high land values will severely restrict the amount of residential property in this CBD area. If those residential units that do exist, they will command high values, particularly if in good conditions.

 

Now, using the principle of supply and demand to find good value of residential property in the CBD area may not be a difficult task for an investor. But, the process of doing it (i.e. from soliciting to negotiating; from transferring of ownership to obtaining financing; and from finding tenants to managing your investment property) is not an individual work. It’s a collective effort.

 

What is your thought on this?

 

Please feel free to share your thoughts and views in my Blog or Facebook Page 

I look forward to hearing your valuable insights. 

Stay safe and keep healthy.

Strategy Deployment in Perth Real Estate Investment

What strategy will you deploy when it comes to real estate investment in Perth property market?

 

Cash Flow strategy or Capital Gain strategy?

 

The common answer which I have gotten from those whom I interviewed was both, that is, they wanted to have cash flow as well as capital gain. Though this answer was not wrong, but, in my opinion, I would deploy cash flow strategy to acquire real estate in my portfolio. For one simple reason, capital gain would follow if tenants are willing to pay rental and rental increment as time period goes. In other words, no capital gain if tenants are not renting the property.

 

Recently, I read a book called ‘Buying Real Estate Overseas for Cash Flow’, and the author was emphasizing to the readers of buying overseas properties for cash flow. Why? 2 main reasons – firstly, for retirement planning and secondly, leaving a legacy for heirs. 

 

There are many ways of planning the retirement. But, many investors like yourself would agree that real estate should always form part of our retirement fund. Real estate is immovable and they are considered as a ‘fixed asset in our balance sheet’. As fixed asset, they should always generate a steady cash flow perpetually for supporting our quality retirement living. Would you agree?

 

As parents, we work hard mainly is because of our children. Thus, leaving a legacy for heirs is always what we hope to give to our next generation. Think about this – how would you feel after a certain number of time periods, the property become free for our heirs. Wouldn’t you be happy to see that?

 

Cash flow strategy is key in finding real deals in real estate investment in Perth property market.

 

What would be yours today?

 

Please feel free to share your thoughts and views.  

I look forward to hearing your valuable insights. 

Stay safe and keep healthy.

Own a Property across Westfield Carousel – Largest Shopping Centre in Perth, Western Australia

Is there a correlation between property asset value and surrounding amenities?

To answer this question, we will go back to fundamentals when evaluating property value by using a simple valuation method such as comparison approach. Once the asset value is determined, we can add premium factors such as near to train station or near to amenities such as medical centres, cafes, restaurants or shopping centre to the base value to increase the overall property asset value. 

Hence, in my personal opinion, there is a correlation of determining property value in having this fixed asset located in an area surrounded with premium factors. 

I have done the following summary of a case study for your judgement call. 

Point 1 

According to The City of Canning website (https://www.canning.wa.gov.au/ccc), the local government has committed a 10 year, $76m City Centre Regeneration Program that is expected to deliver 10,000 new homes for 25,000 new residents, resulting in economic benefits of up to $2.2 billion in gross value. Thus, creating a vibrant City Centre – they say Perth Southern CBD. Go to their website and you would able to see their activity centre plan, milestones that they have achieved and the projects that are currently undergoing. 

Point 2 

Westfield Carousel – Perth’s largest shopping centre. 

It caters to nearly one third of the city’s diverse population with the Total Trade Area population exceeding 645,000. The centre also benefits from close proximity to two of Perth’s major university campuses, Curtin University’s Bentley Campus and the South Street Campus of Murdoch University. 

A $350 million redevelopment, completed in 2018, delivered a new David Jones department store as well as 70 new specialty stores, including 20 restaurants and 50 fashion retailers. Westfield Carousel now comprises 350 retailers across fashion, food, lifestyle, dining and entertainment. 

Point 3 

Elements at Carousel (freehold apartments), developed by Jean Yip Group is located right within the City Canning Centre, across Westfield Carousel. 10 storey development with a total of 114 apartment units are now selling at a price point that is lower than the comparable apartments in the same area. In addition, some of the units are been approved for Airbnb hosting. All the units come with balcony, storage space and car bay. 

Implication 

Buy low, sell high with high potential rentability is the game plan. If the location is no good, who do you think which parties would suffer? I would say Westfield Carousel and property developer, would you agree? 

Apply Now 

ü  Leverage the price point (i.e. lower than the comparable apartments in Cannington) that Elements at Carousel (freehold apartments) offers today to you as a first mover. 

ü  Leverage bank’s money (in which Singapore bank agreed for financing this subject property) to assist you in the purchase. 

ü  Leverage on what the local government (i.e. City of Canning) has endorsed and committed a 10 year, $76m City Centre Regeneration Program of creating this vibrant City Centre – Perth Southern CBD in preserving your asset value. 

Let’s meet up and discuss how this investing a freehold apartment unit can preserve your real estate wealth portfolio today. 

Call Simon at 8100 3386 now.