Both our financial planners and mortgage brokers are often asked about their opinion on the best suburb in the Perth area for investing in real estate. There is no short answer here because every investor is working with a different set of circumstances. We recommend having an individual consultation with a financial planner before any course of investment is started.
However, we would like to give you some of the factors that come into play when choosing a good suburb for investment.
Thriving Rental Market
A rental property without tenants can scuttle any small investor’s dreams of becoming a large investor. There has to be a sufficient rental demand to keep your rental property occupied. Competition for rentals also increases rental income.
Poised for Capital Growth
Suburbs that are poised for both long-term and short-term capital growth are the most desirable. Factors such as supply and demand, current market sentiment and past property cycles are important. Other factors outside of the housing market can affect growth, too. This leads us to:
A Robust Local Economy
If a suburb doesn’t have a sustainable economy, don’t buy there. We like to see low unemployment and a mid to high income level. There has to be an ample supply of jobs. This can be local or through transport that provides easy access to high employment areas.
We like to see a population that is growing and placing demand on the rental market. We also like to see rising income and occupations that lend themselves toward steady employment.
This may seem counter-intuitive, as “affordable” for tenants usually means less money for landlords, but a suburb with affordable housing isn’t in danger of rapid deterioration. Affordability is best found by comparing income to the cost of housing.
Is a new, large business moving in, providing hundreds or thousands of jobs? Is a new train route or freeway being built? Is there a pending gentrification program?
Your Financial Situation
All of these factors are important, but your financial situation may be the most important. If your budget dictates a $450,000 investment property, it wouldn’t make sense to invest in a suburb where the median price is $600,000.
Call (08) 9453 8888 to learn more.