The Perth median house price fell by 2.5% in the June 2010 to $490,000. Regional housing markets performed significantly worse with a fall of 6.1% to a median house price of $395,000.

Importantly the Perth median house price is 8.9% higher than 12 months ago being an annual result above the long term market average of 8% pa.

Unit/apartment prices performed marginally better than housing in the June quarter. This is a curious result and one that confirms the trend of increasing popularity of medium density living closer to services and amenities. With affordability likely to constrain market growth for the foreseeable future we expect selected near city medium density locations to perform strongly over the next 3-5 years.

Looking at a breakdown of the price band performance results shows Perth home under $500k had an average quarterly growth rate of 1.9%, 2.7% for the $500k to $1m band, 2.8%  for the $1m to $2m band and -0.6% for $2m and above. 

The first home buyer market has fallen significantly following the Governments reduction in first home buyer grants. Trade up buyers and investors have filled the void left by first home buyers however activity overall is generally slow. The investor market is likely to remain subdued however very opportunistic for cashed up buyers seeking distressed assets. 

The rental market is presently in its seasonal soft period (vacancy rate at approx 4.3%). We have been somewhat perplexed that the vacancy rate has climbed to its current level however believe that continued sound migration and subdued building activity is likely to see an improvement in the vacancy rate over the next six months.

The commercial property market is proving resilient with sound demand from investors for well leased retail properties. Private super fund acquisitions are proving popular. The commercial rental market is presently quite static so investors need to be wary about acquiring properties that can generate rental growth to underwrite future capital growth.

Residential property prices are expected to improve in the later part of this year. As a consequence the market is producing some excellent buying opportunities for astute investors and owner occupiers in locations that have proven long term performance and show the quickest value growth following periods of stagnation.

With market activity very subdued during the June quarter (ie low sales activity) median price statistics can show dramatic and misleading changes from quarter to quarter. For instance, we are firmly of the view that a quarterly fall of 10.7% for Claremont relative to a rise of 8% for Floreat does not signify that Floreat is a superior performing suburb. As with any asset class, during periods of short term market volatility property owners should focus on the medium to long term investment performance statistics.

We are very confident of a strong return to positive growth results in the later part of this year following the federal election and a 'settling' of national and global economic activity.

Should your require statistics or advice about any suburb in Perth then please call. We have the information at our fingertips.

Sourcing direct real estate investment opportunities continues to be a core focus for Profound Property. One such prospective opportunity is for 'sophisticated' investors seeking to invest at least $250,000 is in a soon to commence a 4 level 17 residential apartment project in South Fremantle.

Investment Highlights:

Forecast shareholder IRR of approx 21%pa or ROE of over 26%
Two year investment period
Land valued at 19% ($450k) higher than purchase price
Highly credentialed developer will subscribe for a 20% interest in the project
Well located property 200m from South Beach
Low debt level of approx 30% of total project cost
Development approval has been granted by the local authority

Profound is presently undertaking project due diligence. Should you have any further interest in this project please contact David Devenish to discuss how we may be of service.

 For the past few years Profound Managing Director David Devenish has worked with the MS Society in Western Australia to identify and acquire suitable ‘showcase’ homes to be used as the main prize in the Society’s major fundraising initiative to assist individuals and families suffering from MS.

‘The 2010 Lottery was an overwhelming success’ said Dave Bugden, General Manager Marketing for the MS Society of WA’. The fully furnished 2 storey, 4 bed, 2 bath home in Hillarys worth approx $1.4m was this year’s major prize and generated a fantastic level of Lottery ticket demand, so much so that the lottery sold out early.

“We have already commenced planning our next Mega Home Lottery  following this years success and look forward to working with David and the Profound Property team in the future” said Mr Bugden.

Our affiliate offices in other mainland states report the following:

Melbourne
The median price for the June quarter increased 8.5% to $559,000 with units also up 4.7% to $463,000. Capital growth for the year ending 30 June was a huge 27.9%. Rental vacancy rate is 1.5%. The market is presently taking a breather after extraordinary growth. Notwithstanding activity is sound yet subdued.

Sydney
The median house price rose 2.3% for the June quarter to $625,000 with units up by a comparable amount. Capital growth for the year ending 30 June was 13.0%.

Brisbane
The median house price rose 0.6% for the June quarter to $456,000 with units performing better over this period. Capital growth for housing for the year ended 30 June was 7.3%.

We are in aggressive business acquisition mode for more properties to manage and offering a 10% reduction to your current management fees for all properties transferred to us for management. We have a constant flow of tenants seeking quality accommodation so if you own an investment property (residential or commercial) please contact us to discuss our services.

Laureley our Property Manager is keen to discuss with you any of your property management requirements. Tel 9286 1005.