Is It Time to Find Bargains at the Bottom of the Property Cycle?

Is now the best time to find bargains at the bottom of the property cycle?

Perth, renowned for being one of the most isolated cities in the world, has an estimated population of 2.04 million—a figure that has since grown. Perth attracted many investors as a result of its mining boom, and property prices have since been going through a correction phase, with pricing levelling out and returning to more affordable levels. If buying property at the bottom of the cycle rather than the top is considered sound strategy, a report suggests this could be an opportunistic time to find bargains. But is Perth currently at the bottom of the property cycle?

Doom and gloom to some, opportunity to others—the Price Predictor Index for spring paints a grim view of the city, assessing 20 suburbs as entering the "danger category". The Index classifies suburbs with sales patterns as rising fast, rising steadily, plateau, or consistency markets. However, where there is a marked decline in sales activity, suburbs are classified as in danger.

However, the Joondalup local government area was found to be the steadiest Perth market, with 10 suburbs classified as either plateau or consistency markets. In essence, this offers investment opportunities as competition in most suburbs is on a minimal scale due to the decline. It may be considered timely to look at properties around the city while prices are lower.

In the east coast capitals, a survey revealed there are more cranes building apartments than in major United States cities. With building activity facing challenges in Perth, investors are looking to offload units. Vacancy rates in the Perth metro area have risen 2 per cent over the past two years. After dropping 9.5 per cent over the last year, Perth rents are at their lowest level since 2011. A downturn in Perth property prices, which have fallen 8 per cent since their peak, contrasts with strong housing markets in Sydney and Melbourne that appear to be at their peaks. Historically, Perth often follows their lead.

With that in mind, lower property prices present opportunities to negotiate. Additionally, supply exceeds demand in Perth, leaving buyers with a range of options. Buying an asset when prices are lower often provides potential upside, a window that usually occurs at the bottom of the market when sentiment is low.

Often, it takes positive news and small changes to lift sentiment and restart market growth. Based on this logic, Perth could potentially be a location worth examining for investment returns. Larger, more expensive cities typically attract population growth due to perceived opportunities, but entering the Perth market prior to future growth may appeal to buyers. Real estate offers various opportunities, and with a growing population and potentially undervalued properties, Perth remains an area of interest for future investment.

When considering an investment, buyers often review their financial position with advisers, real estate professionals, and qualified mortgage brokers.