There’s been a lot of talk about Perth property lately. Some of it right, some of it wrong. But most of it’s simply misleading. So I’m going to set the record straight.
So lets begin by acknowledging the elephant in the room. Yes, property isn’t performing as well right now as it has for a long time. The resources boom is slowing down, population growth is slowing, unemployment is edging up and property prices are decreasing. But there’s good news for those who sit back and think about what’s going on.
Some of our clients have figured this out and they’re using this period to top up their portfolios. Because remember the words of the great Warren Buffett: “Be fearful when others are greedy, and greedy when others are fearful”
Here’s 2 critical things which most investors have missed.
1. Low interest rates slash the risk of investing in property
New investment properties in Perth yield around 5.2% per annum, which is more than you should be paying on your investment loan. And this little buffer is very handy. It’s a safety net should you be under pressure to reduce rents. Or have any unexpected expenses. Or you can use it to pay down your property directly or with an offset loan.
This will combine with equity growth to give you a bigger deposit, ready to launch into your next investment property sooner.
Now, we all know that interest rates will rise over time. Having said that, most economists tip them to stay the same or drop further in the short to medium term.
So when they eventually rise you’ll have also had rental increases too, which keeps you always ahead of the game.
2. Depreciation adds to this buffer now more than ever
Low interest rates mean you can’t claim as much interest back on tax. This is good news because it means your costs have come down.
However it means less tax breaks. So if you need to get your tax down then brand new homes are the winner. Depreciation is quite extraordinary because not only is the house new but loads of things in it can be written off in the first few years too.
OK, Perth is slowing down right now. However it won’t last. The market takes a breather every once in a while. One thing is for sure though. The state’s economy is tough, and it won’t be long before we see strong gains again. And I can foresee the people buying today will be sitting pretty, enjoying the rush back in and increase in the price of their houses.
My advice? Get in now and get set while the conditions are perfect for buying. Otherwise you’ll be kicking yourself when you realise the golden chance you missed.
When you’re ready to find out more, take advantage of our FREE session with one of our Property Investment Specialists. Call us on 9200 7200 to book a time.