Phil's Property Corner - Houses vs. units?

March 20, 2019 by Rebecca Crommelin

On our blog this month, Phil Bertram, the owner of Candour Property Group, brings another instalment of Phil's Property Corner. In this latest update, Phil reveals some great news for investors in Perth, as well as looking at the benefits of building a new house versus a unit. Keep scrolling to read more..

The median sale price in Perth fell 1% in February to $499,000, sales activity remained steady and listings for sale decreased by 1.1%. REIWA’s February Perth market update video can be found here.

Rental leasing activity decreased slightly by 0.8% whilst the median rental price stayed steady at $350 per week. Listings for rent continue to decrease, this time by 2.7% which has driven the rental vacancy rate down to 2.6%, the lowest in almost 6 years.

The continuing reduction in the vacancy rate, coupled with an increasing population is tipped to significantly increase the rent being paid for properties around Perth. REIWA President Damian Collins predicts the median rent to increase to high $300’s per week by the end of the year. The West Australian has written an article on the topic which you can find here.

Over the years we have been asked the question many times - ‘When buying new, should I buy a house or a unit?’ From a liveability perspective units often give a more affordable price point for areas that are very well connected to existing infrastructure and amenities, whereas relatively affordable houses are based further out from the city. It comes down to the location you want to live in and how much you can afford to spend buying a place in that area.

From a risk perspective however, there is more to the story. Often when buying a unit the purchaser is required to sign a contract that waives the finance clause and to pay a 10% deposit, meaning that they immediately enter into an unconditional purchase contract. This is often years before the unit is completed and ready to settle. Should the market change over this time and the unit end up being worth less than it was originally purchased for there is very little that the purchaser can do. If they walk away from the contract the seller gets to keep the 10% deposit, if they try to settle on the unit then they in many cases end up having to put far more cash into the purchase.

In the case of a new house, the purchaser is settling on the land generally very quickly, then commencing a build contract which is finished well within the year (around 6 months with most builders we use). This allows for more robust negotiation as the purchaser is taking advantage of current market conditions, not predicted market conditions years into the future.

If you’re looking to purchase property, either for investment or to live in, and you’d like a second opinion on how to get the best price available in this market feel free to get in contact. We can give you our professional opinion on how to proceed with negotiations on the property you have in mind and compare alternate options that may save you money.

If you’d like to know more the next step is to chat with Phil Bertram. There is no obligation to proceed any further than you’re comfortable with and he doesn’t charge for his time. All strategies are implemented in tandem with your Mortgage Choice Mortgage Broker.

To arrange for him to call you please email him with your name and contact number on phil@candourproperty.com.au and he’ll be in touch.