EP. 20 | Is Perth Still Australia’s Best Property Market in 2026?

Parag Dixit

Hi guys, welcome to our new new new podcast today. Hi Julius, how are you? I'm good. How are you? I'm going very well, very well. Lots of stuff changing, lots of things happening in the market, lots of stuff happening in the world around us.

Julius

Yeah, yeah, that's right. After budget, I can see changes into the market, I can see there is lot of strategy changes in business mind, correct. That's right, it's different things,

Parag Dixit

it's a different thing altogether. And exactly, that's why we are all here together. You're here to discuss about Perth market. Why is the Perth market still booming? Why is everyone still talking about the Perth market? What is in it? Why is it so much of a choice market right now, as well. What are the risks there? What is the good about the Perth market? What, what can it look like? What does it look in the future? Do I still invest in it? Do I not? Let's have all of these questions answered today in our, yeah, in our podcast today. Sure, and be nice to talk about, and just share your views and our views, and we will have a chat about what's what's the next for Perth market now?

Julius

Yeah, of course. Yes, so historically, when you look at Perth market between 2009 I think 11 till 1819, 11 till 14 or 15, they had biggest fall. Yeah, before that, Perth property market were very close to the Sydney property market, where the Sydney population were around three three and a half million people, where Persis Perth was around million people.

Parag Dixit

Yeah, 1/3 yeah.

Julius

But because of the mining boom, the property prices were growing, and actually the land prices were not growing. And when the mining boom finishes, the existing homes were more expensive than what the new builds were.

Parag Dixit

Yeah,

Julius

so there's a lot of gap between the existing and the new, and then that's how the prices were corrected up to 40% that was the past,

Parag Dixit

yeah, yeah, since

Julius

then, 2014 till, sorry, 2012 till I think 14 or 12 till 2021 market didn't perform at all, it was just

Parag Dixit

flat, right with

Julius

minus 40% correction, so yes, correct, yeah, so when you check out the inflation, also that time, also there was a new supply coming up,

Parag Dixit

yeah,

Julius

but there was not a lot of investors were looking at those properties since prices were not growing,

Parag Dixit

yeah, but

Julius

because of the short supply, the rentals were growing, the yields were more than six to 7%

Parag Dixit

all right, okay,

Julius

so there were more opportunities created in market, and then there was a time when the population for the entire W state hits around more than 3 million people. Yeah, there were enough pressure has been created in Perth metro. Then from federal, I could see there are a lot of defense investment when we look at the mining in mining, also there was more diversity, also in terms of the for the investors, yield were much better,

Parag Dixit

yeah,

Julius

plus in Perth the compliance is build house with the double brick, so it's a more stronger home,

Parag Dixit

much better home, much more in construction than what happens inside, yeah,

Julius

and since market was quite, there was not many houses built, but the population grieve, so there is lot of demand and supply gap.

Parag Dixit

Yeah, all right, all right, okay, yeah, lots, lots of change. In fact, I distinctly remember that for a long period of time, nothing much changed there, not period of time, nothing much moved there at all, and it was all I think affordable houses were so much affordable. I think about a four five years ago you could buy a nice house for 303 $50,000 and good four-bedroom house, and very affordable mortgages, affordable good income with people, good boom in the in the stuff which is happening. But yeah, it was, it was pretty flat. And then I think the search is exploded, right? Search has exploded like crazy. There was suddenly it was like Perth, Perth, Perth, Perth, and Perth. And post-COVID was the.. I think the timeline wise, post-COVID, there was really a big change in the outlook, which came into Perth. Yeah,

Julius

post COVID, there was a lot of access to data, and fundamentally, there was a population boom in Perth. When you see when the investors are looking for a better product, or better yields, or better growth prospect, better affordability is better homes. Perth was offering everything by then. Still, when you look at the incomes in Perth, they are extremely higher than what you see towards the eastern states, yeah, versus the property prices were much below when you go and build new houses, even though the population is growing, so that means you have to build new houses, yeah. So the gap was widening, so now it's it's another way that basically new houses are more expensive,

Parag Dixit

yeah,

Julius

and the established homes are extremely cheaper, so there was a big gap.

Parag Dixit

There's a huge gap,

Julius

that's a humongous gap, which has to be filled. And then that's how the investors started moving into the Perth market.

Parag Dixit

That's how they started. And then good rental yields, so their rental yields had always been good. In fact, whatever price rates have changed, and whatever they are today, even five years ago, the rental yields were phenomenally high. Why, but now they are even better, much, much better. Better rental yields are still existing there. House quality has already been always been there. Migration happened. Then I think that was also a time where a lot of the government policies changed with respect to how you can get your visas, and people were staying in various places. Then they realized, okay, I can go to Perth, and I can get great employments, and I can stay there as well, and I can get my visa, so get my visa. So quality of life made people move into Perth as well, and that's what also called caused a net in state migration and overseas migration, which both led to a population boom, which happened there in Perth, and that's caused good one, great amount of interest in there in about five years ago, and when we look at it now, people, that's the whole reason why people still say that. Okay, I think that this long way to go for Perth is a beautiful side of the country. It's a nice side, it is climate wise, it's all good, very similar to what it is, time zone wise, it's closer to Asian markets, and it's closer to the other side of the world. So, it's time loan zone wise, it's also not bad at all. And that's why the conversations post budget have moved to not saying whether I will invest in Perth or not, but am I able to get a three month old price or a four month old price? Yeah, can I get into it? It's not that I want to get into it, or should I not get into it, but rather than am I able to get an earlier price because I want to get into it right now. Are fundamentals still supporting growth? Correct, because I want to get into it right now, right?

Julius

Correct. So, most of the conversation are strategy based, but still there are a lot of interest in a Perth market, because when that's only capital city, which is offering you a better property, yeah, with the better yield, better capital growth, with the better house, yeah, yeah. So that's why now what investors are looking at. Okay, since after budget there is little bit of correction in the market, yeah, can we negotiate but still get into the property market? In Perth, are we still able to get into the Perth market? How is the current market conditions, and are we late to cycle or not? Yes, so when you look at the Perth market, yeah, they are like smaller markets within the market. So basically, when you look at the smaller markets here, there are a lot of markets which are booming as well. Yeah, so in Perth market, there are few markets who are overpriced because when Perth market was booming during that time. Every market within the Perth market was growing, and a few markets pick

Parag Dixit

whatever you want to pick

Julius

whatever you want to eat was growing. So few properties were priced, they were correcting, but there were a lot of markets which are actually fundamentally good. There's good owner occupied demand, there's extremely lower supply, there's good affordability, good affluences. These markets are holding prices, and they're actually growing.

Parag Dixit

In fact, yeah, I remember I read, and we searched just a week ago, or something, in the newspaper, even in the month of May, birth market has grown versus the Sydney or Melbourne market, which has degrown. Perth market has still grown over in the last month, which shows that it has still got its strength and still got its mojo into it, it has a way to go forward, and, and that's why, and it's that's why, despite the 90% growth in the prices over the last five years, correct, we still find that there are still a lot of interest in the birth market. Why people will want to say, okay, there were legacy issues, there was a mining issue earlier, you know, that was the only way you can get an employment, so you know, you, there were all those stories about $10 a cup coffee and all that stuff, and then it slowed down when the resources move, slowed down, but all those legacy legacy issues are not there anymore, you know, the past slow moving market is not there anymore, now it has changed the world, it's the birth market, is a complete flip from that market now. It has population, which is growing. It has services industry, and one of my, one of the ways to search this is, you can go to a seek.com or an indeed.com and try and see how many employments are there, and you'll find so much of services employment which are advertised there that it tells you, okay, all right, there is, there's a lot happening out there. Infra is not only mine ore or mining, it's, it's a lot of special minerals as well, which is coming there. LNG has come there a lot, and a lot of that bit is resources. The nature of resources has also changed out there, which is allowing people to say, okay, it looks, it's not one resource which goes up and down, and then the whole world collapses, but it's also about the other stuff, which is happening in, in the market, and that's what is going to drive the future in, in the Perth market, and that's what's giving strength and confidence to people, that okay, I'm, I think this is where the market is performing, and this market still has got a lot of steam into it, and still has got a lot of things ahead of it, right.

Julius

Yeah, that's right. And then that's reflecting on ground as well, because when you look towards the little effluent market, or when you look towards the markets which are actually purely occupied by owners, there is extremely high competition at this stage. So, like, people are competing for properties, prices are going, still going up, and they. Lot of other factors are impacting the future growth as well, like supply is still lower, even the post-budget ES, we can see little bit turmoil in the market, but still you can't produce like 1000s of homes overnight,

Parag Dixit

yeah, you can't produce that, you're

Julius

still getting more people, and you need homes, you're not building homes,

Parag Dixit

yeah, traditionally, because birth is also a bit more complex in the manner that you have employments where you can earn well, besides trades as well. So people are not drawn to trades only big to earn really well. They say, okay, I can work in services, I can work in resources, I can work in the mining thing, and I'll earn maybe more than what I will earn being in the trades, so I would want to have, so I would want to have explore the other employment avenues, and that brings a trade shortage into it. When it brings trade shortage into it, then supply constraint automatically comes in, because you don't have more constructions catching up with the population, which is growing there, even though there's a lot of infra, which is coming in, and that also adds to the problem, by the way, when there is a Lindsay stuff, which comes in, then government pulls in a lot of money into it, then workers move there, when there is something else coming in, the other resources, the workers move there, there are hospitals being built, there is other stuff which is being built, there's a defense construction happening there, so all of that is taking people away, and then it takes them away from what they can do, maybe construction or something, and that causes a shortage of manpower, and hence a supply shortage in terms of properties, which are available in the market.

Julius

Same thing. Yeah, so when you look at the MetroNet as a project, where they're connecting most of the Perthies to with the Perth CBD, it's close to 20 billion, I believe, and then most of the workers are engaged into that kind of projects. That's why you have shortage of trades in the construction industry, because that is more rewarding.

Parag Dixit

That's what more rewarding, unrewarding. Plus,

Julius

construction prices are going up. So, basically, what you have now at this stage, which is, for an example, median of 800,000 good four bedroom, two bathroom house with 400 square meter lot in a good suburb, double brick home less than 10 years versus what you're building now, crossing million dollars. So there is a gap of $200,000 which you have to do, plus lot of uncertainty, because it will take at least one and a half to two years to build your house.

Parag Dixit

Yeah,

Julius

even though in between that, either your builder gone down or construction prices are going up, lot of uncertainties. That's why whatever you have, it's short. Whatever is coming up is uncertain. So that's why there is lot of pressure on existing properties. Demand is created, population is booming. There is lot of migration, even though interest rates are higher, so that's why you can see there's still a lot of demand towards the existing properties,

Parag Dixit

100% that's right, and despite what has happened in the interest rates in the last few years, despite all of that, despite we being at a pretty, pretty close to the peak, or maybe at the peak of interest rates, yeah, and twice, you know, it was at the peak, then went down, and then came back to the peak. Perth market has not slowed over this period at all, because interest rates have not been a factor, considering the good rental yields, which come from there. So, people are able to afford, and they are able to say, okay, the house, the houses are good, my rental, my rental affordability of my tenants is pretty good, because the employment conditions are pretty good there, so I say, okay, I'm unable to buy a property, which, which holds even at this interest rate. I can hold the property, and I'll get a good quality tenant, and they can also pay the rent to me. I remember this, I think about 30 35% of the income is the only rent which you're paying there, which is pretty good rental affordability, despite what is happening in the, in the market, and all around, so that's why it is at some point of time, like you said at the start, people who are going and saying, wherever in Perth, I can get for this X Prize, let me buy, and that wherever in Perth did, did bring a phenomenal boom across, not uniformly, but across, there were suburbs which moved up, there were suburbs which moved much faster, there were suburbs which moved a bit slower, but everybody was winning, so then you know, didn't bother. Okay, I win less, that's fine, I was still willing, you know, is there, but there are some great suburbs to invest in. There are some phenomenal suburbs, which have, which have been, maybe, if you look at the geography of Perth, and you start mapping down into a north, middle, south, sunshine to south, and all that. So, there have been some great suburbs to invest in, some great areas to invest in, with their all various reasons why somebody should exactly right.

Julius

So, when we look for an investment, we look at few important data factors, demand and supply is one of them, but demand and supply has limitations. Yeah, yeah. So, for an example, I'm buying in a place where, yes, there is gap between demand and supply, but as owner, I'm not able to afford it because my incomes is not great. Yeah, yeah, that means I don't have buying affordability. So, okay, yes, all good, but prices will not move up. So, in Perth, also, it's a similar factor, it's everywhere in Australia, so. The affordability is a big factor. The way the property prices were growing around six to eight months ago, there were a lot of markets, nothing wrong against the few Quinanna markets or the Rockingham markets, but the way the few of the suburbs were growing down south, and they've touched millions, where the incomes are not that great. That's why what we could say is they already reached their peak at this interest rate, but when you go towards the middle of the CBD or towards the inner CBD suburbs, or when you go towards the Gosnels Council or the suburb like Thunleev, where you have a lot of development opportunities, you won't find lot of land there, and prices are still in between 800 to 900,000 With the bigger piece of land, you still have a lot of opportunities to convert your properties in the dual income and improve your cash flow. Yeah, so this type of opportunities are still available. So, when these are these are still like hot cakes. Similarly, there are markets where, when you go towards the under council, or when you go towards the Para waters, Harrisdale, every other owner occupies those who can afford, and those who can afford up to 1.3 to $1.4 million Yeah, they can still buy these properties because of the schools or the amenities plus the affluency of that area. Yeah, they are the markets which are extremely strong, where of when we say, okay, shall I go and buy that? Yes, because these are the markets where you have a persistent growth. Yeah, similarly, when you go towards the northern side, when you go till the two rock years, how much should I buy? Okay, probably I can buy property worth of 750 to maximum $800,000 If the property prices are growing above that, it's a riskier. Yeah, but when I come towards Alkem, shall I, or Eglinton, or when I go towards the other side of the northern side, shall I pay around more than a million dollar? It will still grow. Yes, it will still grow, because there is a fundamental, there is income, there is a good social economy, and there is something which will help you to grow your property prices faster, because there is a buying and renting affordability. So, sometimes investor does few common mistakes, they hear about, okay, my friend is buying there, or if Perth is growing, wherever you feel like, okay, going, whatever the media is talked about, just go and buy, it's not like that, when the market is growing, that time you have to understand which of the right market you have to focus on, you have to focus on the right yields, because yes, you're buying a property worth a million dollar. If it is yielding at 3% are you able to sustain it? No. Right yield, right social economy, right fundamentals, right buying affordability will give you the right product.

Parag Dixit

Yeah, correct. Absolutely correct. And that's that's the important bit to remember in, in, in Perth market, that you will not have all the suburbs which will grow similarly and more, so now it's going to be more pronounced. Earlier, you could say Perth has grown by 90% Even if I get 80% I'm happy with it. That's fine. I, but now the time is gone. Now the time is going to be where you will have to have suburb by suburb strategy. You will, every suburb will have a different strategy. Every suburb will have yields and economies, and whether it's a balance above, whether it's in yield focus above, or it's a growth focus. What kind of suburbs are going to be there? What kind of people stay there? What kind of employments they have? And if you don't go into that, then you will get into a mistake of buying into a property without knowing what's driving it there.

Julius

It's a strategy, correct? If

Parag Dixit

you don't have that strategy, you're going to get into a mess for sure, right? If

Julius

I'm buying in self-managed Superfund, then I have to get something in either Vallard or probably in Piero Waters, Harrisdale, or the goods above where there is a lot of owner-occupied demand.

Parag Dixit

Yeah, yeah,

Julius

but if my strategy is okay, I want to get into a lower segment, they are suburbs for that, but if my strategy is generated, good cash flow, they have good support for that, so it's completely on the strategy based, because according to the strategy, this is the property price movement or uplift of the property price movement will change,

Parag Dixit

will 100% change, and that's what is important, because strategy is going to drive you towards how you're going to do, you can obviously look at affordability, people look at affordability a lot, and affordability is one more reason why people had gone into Perth, and it's still a strong reason why people had gone into Perth. You can say, okay, I look at it both ways, I can afford a house at this price range, in this one, like you said, I am looking at a lower price range price, and I'm looking at a higher price range suburbs, and I say, okay, this is affordable to me, I can go there, and that is affordable to me, I can go there, and yeah, I'm my strategy says that is I want to grow suburbs, so I can go to those higher sales and or the world, or if I want to be at a price point, then I'm going to different things, this I can afford this, or I can afford that, but what's important in this is to understand that if even if I'm getting a better enterprise entry price, but my yields should be consistent, because I'm looking at a sustainable investment. I'm not looking at a one-time investment, and then running away from it. If I have.. if I don't have a sustainable investment, which will keep on taking me further, because prices are different now. Four year ago, prices are not there, but I can buy for whatever, and I don't. Going to have a large mortgage, I don't mind doing that today. Yeah,

Julius

correct. Four years ago, probably the median was around five to 600,000 depends on the suburb issues, and yields were very close to six to six and a half percent. That means covered, everything is covered now. The way the property prices have moved, yes, in few places where property prices are $800,000 but your yields are very close to 4% There are places where and then they don't have a renting affordability. Also, that means you can't expect a lot of rental prices movement.

Parag Dixit

Yeah, that

Julius

means when the interest rates are moving, or if this interest rates are stable for a while, that means there is a lot of heat to your pocket. It

Parag Dixit

is, so

Julius

you need to have sustainability. So that means affordability is not the choice at this time, so there are few suburbs where, okay, yes, property price is a million dollar, you will be getting $900 rent, but because of the renting affordability or demand for that suburb, the EU incomes or rental incomes are rising.

Parag Dixit

Yeah,

Julius

these are suburbs, if you can afford it, there are suburbs which are also available in Perth market.

Parag Dixit

Yeah, that's true, that's true, correct. So I know that's what that's what was one of the reason why the Eastern State investors were drawn towards Earth to invest there. We can have better entry price and all that stuff, but no, no barriers to entry now. Buyers agents had made this so easy to invest into this, that area, because you could rely on a professional advice and be able to buy properties, you could. There's a good now network of real estate agents, buyer agents, and property managers, and building and pest inspectors, which were allowing you to be able to safely, relatively safely, buy a property, so all that allowed you to buy, but that risk of chasing the affordability is large, it's yeah, you can't just change, look at the affordability alone, rental yields are pretty much important now, and with these new price ranges, it's even more important now. We've, the rental vacancy is not going to remain same everywhere. The rental yields are not going to remain same everywhere. Every suburb is now changing its nature, correct? And new stuff is coming in, and new fundamentals are getting driven into the Perth market with respect to rental yields, right?

Julius

Yeah, correct. So, yes, vacancies are tighter. There are few suburbs where probably there is more investor proportion, yeah, where, because of this excessive sale and all, probably you can see a little lot of higher vacancies, but wherever the rental affordability is not great, that's a place where the rentals are not rising. Yeah, so, um, if suppose if you're buying a property at around $800,000 with $700 weekly rental, yeah, and if the interest rates are higher, that means you will have a limited growth, because the moment you see a $200,000 property price movement, and if the rentals are not rising for the next investor,

Parag Dixit

yeah,

Julius

it's a big gap,

Parag Dixit

it's a large gap, large gap, that's

Julius

why, but there are suburbs where, because of the renting affordability, you still have a good rental growth.

Parag Dixit

Correct, correct. That

Julius

means rentals are catching up with your property price movement. That's the place where actually you would see a more difference, because then you can see a property price movement, because there is always a demand into that area.

Parag Dixit

Correct. Low vacancy rates is a very good magnet for a good rental growth as well, right?

Julius

Yeah, and then renting affordability as well. So there are markets where investor can have single, or they have a choice of both.

Parag Dixit

Yeah,

Julius

there are still a lot of markets where you can still see there is good renting affordability, good rental growth, tighter vacancies, and then you have very, very high gap between demand and supply, so of cash flow has become important again, because of

Parag Dixit

cash flow has become important again. In fact, post budget, and the way budget has changed, and now it has brought focus to having lower amount of negative gearing rather than higher amount of negative gearing, which allows you to manage your taxes better. Perth has come into focus again because of that, because you can still find positive cash flow properties here, if you're a, if you're putting in 20% deposit from your side, and if you're buying an average 600 700 $800,000 property, your rental yield versus the loan, which you're taking, is still allowing you to be marginally positive, or just marginally negative, and, but you're still in a very, very affordable zone, and that's why good cash flow properties are available in Perth, which is still telling investors, okay, if I want to invest, I, because if I want to invest, I have to invest, and if I have to invest, then where do I invest, and it's an easy question, when you say, okay, I will be able to afford this property, I may have earlier negative ones, or I may have a future negative property, but this one can hold another property for me, and if I buy in pairs, which I buy, say one here and one in different state, and they can always lean on to each other, and then I'm still able to afford a property, so a cash flow positive properties are still being available in Perth, and still being an option available to you makes it a stronger market, right, and that's that's what's that's that's the that's the rental strength, which is there in that Perth market, which allows investors to still come in there.

Julius

Yeah, that's right. So rental market is stronger, yields are stronger, you still find a property with around, if you buy a property at 20% deposit from your side, then yes. That five and a half percent yield is sufficient, or that 80% loan, but if you're buying a property of an equity or something, when equity with the stamp duties also include 104% loan, then probably a little bit of negative, then but it's much lesser than other states,

Parag Dixit

much less than other states, and, and, and you're right in this state you are finding that, okay, you're not too much negative, you're finding that tenants are wanting to stay there as well. Your vacancy rates are so low that tenant competition is always there, and that's that's going to always have a rental growth. So, even if you are not positive right now, with in the future, if it happens and the rates go down, then your rental growth will be even better, because your rents are growing, and if your interest rates start coming down, you're going to become positive very, very quickly, and that is why the yield is going to keep on pushing the growth. The rental yields are going to be there, and growth is going to be there, and Perth can become a market where you can have both rental yield and a high growth, as high

Julius

growth is,

Parag Dixit

and that's that's that's what makes an investor, you know, say, okay, I'm really interested in Perth, despite what's happening, and how the investment landscape looks like. Still, Perth is a market where cash flow is, is there for me, cash flow advantage is there for me, and hence, when cash flow has become important and a very critical path for me to decide whether I will be able to invest into an area or invest into the suburb. Should I go to Perth or not? And that's what's becoming a big magnet for us to invest in, despite this. Despite this, I just want to talk about new home and land packages or new off the plant properties, because Perth has never been a big player in that market, right? And we know there is a trades and construction issue, but still we are finding that some pockets here and there are now coming through with newer home and land packages, and is attracting investors a little bit into their fold with the new budget coming in and saying that, okay, you can invest into a newer home and land package. I know they are overpriced, they overpriced a lot, and the difference between an existing property and an or and an off the plant property there or a home and land package there is definitely the land sizes which are smaller, much smaller, and property prices which are much higher compared to an existing property. What, how does it look like in the Perth perspective?

Julius

You see, depends on where you buy, so Perth always have a control supply, you can only see supply towards the southeast, north, and then towards the south side of the path, where you can see a little bit of supply coming up, but the property prices are more expensive in the same suburb. You can still get the property worth of 850 k with four by two bath, at least 450 square meter land. In a similar suburb, I spend $1 million for 350 to 400 square meter land, relatively smaller house, that means you'll be paying around 150 grand more.

Parag Dixit

Wow, that's a lot,

Julius

that's a lot. Yeah, and then your cost is higher, plus a lot of developers there doesn't cover your landscaping cost as well, so this is just a build cost, and then you need to do the landscaping and the driveway and all those, it crosses more than a million dollar, so yes, these are the good properties, but I can see those risks as well, because you're gonna take at least two years to build. Second thing is, this is more expensive if your strategy is only to claim negative gearing or depreciation on that homes, but you're still paying around 150 to $200,000 more for the same product, where you can save that and have that property prices to grow for the existing one, that means that's a growth gap, which we have to cover,

Parag Dixit

correct? You're

Julius

actually killing your growth in home and land packages.

Parag Dixit

Yeah, absolutely right. And see, the with the new budget coming in, somebody pointed that out very well, that saying that, okay, you can buy a new home and land package today, but when you go and want to get your capital gain out, and then you want to sell that property, that's an existing property for security else, so they are not likely to pay the premium you are expecting to get, if the, if the concept says that an existing property should not be that high, then then it's a, then it's a very, then it's a very, it's not a concept which is now coming together. So, as an owner occupies a person who wants to buy a home and land, you are either going to stay there for a long, long time with that ownership, and then you run the risk of a future government coming in, changing the laws once again, and then you back to square one. You find that you are having an expensive property, where, and you're not able to get all the kind of advantages you went in for. So, there is a bit of a, there's a bit of a, not a great outcome, which is coming there with the new homeland packages there, but especially with the supply constraint, the trades constraint, the extra, the higher price, which you're putting in, and the smaller land sizes, which makes an investor think, Should I really look at that, or do I do I think that, okay, I'm better off buying an existing property, which I can see, maybe a two year, three year old, four year old property is fine enough, because as soon as you buy an existing property, whether it's a two year old property or. 20 euro pole property depreciation now has no meaning left. Yeah, with the new budget rules coming in, it doesn't matter what the depreciation is going to be, because I cannot anyways claim it. It's going to just pile on and become just going to get into accumulated rental loss in my tax return somewhere. So I am looking at the other aspect, and the rental yields, and a larger land size, and a capital growth is coming through, and if I can get that on an existing property, which is there today, which is anyways not such a high maintenance property in Perth, and I'm then I'm much better off from there. And that's the, that, that always brings through a point that we will, whatever we do, so we can always talk nice about Perth, and we can always say great about Perth, but that always also carries a risk, a large risk is carried by in such markets as well, right? Which is, which is, which is, which brings to investor to a point that should I invest or should I not invest into it, or what should I look at when I want to invest into such kind of areas?

Julius

Yeah, correct. So every market carries risk, similarly, birth as well. Yeah, the first risk would be how much you want to pay versus in what asset and where in birth? Yeah, so the strategy is important, and then right assessment of those data factors is important. Yeah, either I'm buying property in a location where there is good land size, there is scarcity of land, everybody would like to live there, and then yes, there is always a competition for the property prices. Yes, you'll have a long-term growth, yeah. But if you're buying a property where, okay, it's somewhere in the fringe area, or where you can see potentially there could be a lot of supply coming up. Yeah, there was a time when those properties were $400,000 where you would have bought it by then. That's fine, because you already carried a risk, and then that property had become around $800,000 you got your reward. But if you're buying now the same property for $800,000 then I would think twice before I invest $800,000 in which suburb, so rather than getting into a suburb where there could be potentially more supply coming up, and then $800,000 will remain $800,000 for next five years, or I'll get into suburb where there is a demand and supply gap, there is a competition, there is not a lot of supply coming up, and then I'll be better off in that kind of suburb. So suburb selection is very important. Yeah, so if you're not doing that, then you're carrying that risk, that is the number one risk. Second is basically market risk, like over supply risk is there, you can have economic shock or changes in demand and supply gap, that is what we have taught. So, this kind of potential scenarios,

Parag Dixit

economic shock can always be there, even if it's a state which is a high resource driven, correct? But it can lots of stuff can change. We've seen in the commodities market, commodities market behave in a very different way. They, though there's a lot of LNG products coming in. There's a lot of other products stuff coming in into Perth market, but that can always change at any point of time. So we should know that risk which Perth market carries, that and the earlier slowness in the Perth market, which is a legacy issue which people have was driven by the resources issues itself, and that is what has to be taken into account when you look at investing into Perth, but there's also that other between Perth market people. When the Eastern investors had come into the Perth market, they had not understood that Perth construction is a very different construction. So, what is what is acceptable in Perth is is not, which is acceptable in the eastern side, we've seen these issues coming up during building and pest inspections, because though they are double brick houses, they behave in a different way, and people don't understand how those properties can be good, which, whether they are right properties or not. So they've made mistakes when they are buying those kind of properties, bought something which they should not have bought or not bought something which they could have bought.

Julius

Yeah, so right asset selection, basically right asset selection, right type of the quality of product. When and then if your, if the asset is not matching to your strategy, that is also a problem. Like I had seen someone who is buying around 1960s property in their SMSF, where you have a big land, but you can't do anything, and you're buying that property for an expensive rate, because you're not buying it for $300,000 Yeah, you're not

Parag Dixit

buying it for $300,000 and it's not going to sustain your 20 years when you're going to make a lot of money out of that,

Julius

correct? So, if you're doing that kind of mistakes, and that's risk, which is in every market, yes, similar kind of risk can happen to your property segment as to

Parag Dixit

true that that risk is there, and more so when you are, when you are not aware of that market. If you don't have typically, that's where the professionals, like a billing and pest inspector, an accountant, or a buyer agent, comes into play when you are so far away from the market which you're wanting to invest in, and you have no idea what to do there. And then you find that all right, I've got into market which I didn't know about, and I've got into a riskier transaction, which is not the outcome which I wanted to get into, but still there is whatever we say that there are risks which people carry, there's a risk here, there's a risk in Victorian market, there's a risk in Queensland market, there's a risk in NSW market, but considering all. Those risks, is is Perth still worth buying into? Maybe let's, let's look at that. Is despite all of this, is Perth still worth buying into? And that's the question, which I'm still getting, despite a month of budget, and despite a month of what's a few months of war, and inflation going haywire, and and petrol prices going haywire, living expenses going haywire, but still people ask, asking worth buying.

Julius

Yes, see, because it's, it's always fundamental based, right? Because property buying is a long-term game, it's not like you're buying it for today and then you're going to sell tomorrow.

Parag Dixit

Yeah,

Julius

so when you compare entire Australian market with the Perth market, so what every, for every strategy, for an example, if I'm buying a property in my normal strategy, where I would like to accumulate wealth and build upon it. If I would like to spend around in between 607 $100,000 Perth Steel, those are options. Perth, Metro Steel have those options where your yield will be very close to 5% Yeah, you can still buy a property on 700 plus per middle land, which is a fairly moderate double brick, three bedroom, one bathroom house, good condition, probably 3040 years old, but still have good bones. Other than Perth, then you have to get into a regional town centers, that means that's only capital city which is offering that, that is number one budget constraint. Second thing is basically, if you're buying a property in your sales fund, your super fund,

Parag Dixit

yeah,

Julius

and if you want it to be in a capital city, yeah, then that's only capital city where you can find it's a no

Parag Dixit

brainer,

Julius

no brainer, for $850,000.04 bedroom, two bathroom, at least one day to 450 square meter land, nice home, double brick, goods above with the good owner coupe ratio, good fundamentals. Rental will be very close to $800 per week. Capital city, you still have that option sustainable, that

Parag Dixit

option. Yeah, and good cash flow, good rental demand, correct? Good purchase demand as well. There's a long term prospect of that property, and of the area, and of the market, with so much happening there. It's a pretty strong scenario for someone to look into when they are wanting to buy and invest into an area where, for example, if they sell in a super fund or if they're buying in their personal name or if they're buying in any other structures, it makes sense for them that the fundamentals are strong in the Perth market, despite what has happened in the investment landscape, despite what people think about the investment landscape, the fundamentals of investing into Perth are so strong that if you are able to buy into quality locations, if you are able to buy into the suburbs, which you are, you can get into, if you are able to get your head around whether I should buy extreme north or middle north or around the CBD or south or down south or down down south in Manduras and Bunburys of the world, where do you want to buy, which are the quality locations? If you can get ahead around that, you can have the data and you can do the data mining and understand that data and interpret the data pretty well. Then, if you can think long term on that market, it's a, it's still a big winner in a Perth, which is available to people, right?

Julius

Correct, it's a huge market, which offers everything, in my opinion. Like, you have affordable locations where you can make good capital growth, you have good rental yields, you have locations which can prefer, okay? In a case, if suppose if you are getting to a location where you would like to develop something close to city, but affordable section, you still have those preferences in Perth. Absolutely, you still have a very good fundamentals. You have a huge infrastructure and defense projects, which are creating 1000s of jobs. That means you have employment stability, you have economical stability, you have a good growth. So it's a good market, which gives, which caters a large amount of investors,