Peter Gavalas on Perth's Micro-Markets and the Post-Budget Shift

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Welcome to Street Secrets. I'm Chris Bates. In the studio today with Peter Gavalis from Resolve Property Solutions. We're going to the West Coast. Haven't been there for a while. Great part of the world. And today's episode we're going to be doing post-budgets in the middle of June.

You know, we did a few episodes, you know, over the last sort of six, 12 months over there and, you know, pre-budget.

And so it's been a bit of a different world, but I think it's important to sort of kind of delve a bit deeper into sort of the Perth market, what, you know, Peter's seeing, Peter's experience over there. So thanks so much for talking to us today.

Hi, Chris. Thanks for having me on. Looking forward to having a good conversation with you about Perth and property and the current market situation. Yeah, absolutely.

It's nice and sunny outside. It is. It's always sunny on the West Coast, isn't it? Particularly if you're living in Melbourne right now, you're probably getting a bit jealous. But the Perth market has been hot.

Yeah, to sort of take that analogy a step further, over 100% easily in the last five years, some suburbs up even more than that in properties.

And, you know, if we sort of talk about, you know, now it's not about, well, I like to make these evergreen, but it is a bit of a shifting market potentially over there. And, you know, I'd love to get your thoughts on it.

But before we do that, let's just get to know Peter a bit. So when did you sort of start the industry? What made you sort of make the shift to what we're doing prior?

Sure. So I'll probably go back to when I was young before I was at school. My dad was a builder and developer. So, you know, worked a lot with him in the building industry. He used to do a lot of his own developments.

And, you know, probably going through and seeing what a good quality build looks like versus a cheap build because he's always built quality and you'd see some cheaper stuff on the market as well. That's a pretty good indication of, it helps us now look at good quality products.

And also what worked, what didn't work. He tried over the years, tried different things and some worked, some didn't. So it's good to understand probably from a younger age what sort of buyers are looking for and really how that affects the sale price.

Because if you don't have many people looking for a particular product, obviously you get a lower price as well. So it's good to get understanding of that from a younger age. As I moved into my Finnish school, I got involved in Finnish civil engineering.

So I was involved in that for quite a long time. But again, within that property was a big thing in that place, of course. So, you know, we looked at sort of land, a lot of land development.

So again, probably from the land point of view, cost of developing, you know, cost of building, looking at sort of different factors that affect that could be soil classification, could be slope on blocks. drainage issues, all those kind of things.

So that's really kind of helped me where we're at today because all those factors from building to the land to the, you know, is it on a roundabout? Is it on a T-junction? Has it got high voltage power lines?

All those things, I think, which were involved in that assembly and gearing space has really helped me now to understand and appreciate what a good property is and any negative aspects of that property as well with the surrounding properties and land, I guess. Yeah.

And I think on the civil engineering side of things, it's all about making feasibilities work, making the numbers, due diligence. So very, very important to maintain those skills and what we do at the moment.

So all those life skills and along with myself, I've been investing in property for over 30 years and building and developing. So yeah, all those skills have helped me come to where I am today.

Yeah, it's interesting. I mean, it sounds like you came out of the house back in 2019 or something, so like six, seven years ago. But prior to that, obviously, you were doing a lot of your own stuff.

And it sounds like you had a household that also taught you some stuff about property as well. But I mean, the engineering background, I guess it's not so much work. I guess it's just the mindset or the philosophy, I guess.

and and the dd and the you know the feasibility i think that would you know the attention to detail you're probably going to have to have to to be successful at that job to then you know because property is a little bit about that right a little bit but a lot about sort of you know weighing up different properties and different price points and it's a very you know technical when you are trying to value properties etc is that is that where it really just allows you to sort of go into second nature okay let's let's let's just get to the detail here

Yeah, absolutely. So obviously very detailed, focused and very analytical.

So it's not about, hey, look, you know, this ticks the box or it's worth this or, you know, we go into a lot more detail and look at, you know, oh, I certainly look at a lot more details, size, you know, orientations and, you know, year of build, maybe, you know,

Yeah, sort of quality of build. So there's quite a few factors that I look at.

When you look at sort of, a lot of people might do a bit of a, yeah, this is the same area, same size, same block, it's worth saying, but it's not always, as we know, it's not always the same. So yeah, very, very detailed.

And I think also location in an area isn't always the same. So some parts of suburbs are better than others as well.

Did you, so what made you make the shift? So you were...

Yeah, look, I've always been involved in property with my dad from a young age. Myself, I've always been involved in investing and developing and adding value strategies. So look, I've always been interested in property. I wanted to do something in property. I'm not a salesperson, so I'm not there to sell anything.

So I looked at the buyer's agent space and figured this is probably good for me because it's more an advisory role, trying to help people make good decisions and not get ripped off.

sitting back on the sidelines before this, I've seen so many people get ripped off by making bad decisions, buying their own properties, paying too much.

So I thought there is a space here that people need that support because as we know, the selling agent works for the seller, trying to get the best result for them. So trying to balance that off a little bit and having someone working for the buyer,

and making sure the buyers get a good deal get a good property in the right location and the right price so i think that's very important there was a big space in that area i feel i felt at the time

Yeah, I mean, good time to come to BA in Perth.

I mean, ridiculous amount of heat in the market, people wanting to upgrade, but then also the other side of the coin, ridiculously tight listings, influx of investors from the eastern seaboard and BAs who never even lived in Perth or had been to Perth. So how's that sort of us?

That boom, Ben, where do you sort of see it sitting now, like the Perth market and how's that shifted in 26?

Yeah, look, I mean, the start of the year, of course, has been very strong. We've had some really good, strong growth for the year to date. So I think we're up about 10% to 11% for the year. So it's been very strong.

Obviously, since the budget changes, that has made an absolute impact on the market. Look, we did have some factors, of course, that have... Yeah, probably reduced a little bit of confidence, reduced a little bit of buyer's aggression, I guess.

So obviously with the free interest rate rises, the war in Iran, cost of pressure living or oil prices, all those things have had an effect slowly on the market. But then I think this budget threw a bit of a curveball as well and sort of added to all that as well.

So I guess we have seen not as much aggression as we saw. early this year, but still quite strong. I mean, we're still seeing upwards of 10 or 15 groups through most home opens or wood properties. So previously we might have seen 30 or 40.

We're still seeing three or four offers on properties, not sort of 10 that we were seeing before. So there's still offers, still people going through. What's changed a little bit is days on market. That's probably gone to 14 days. It was around nine days. Previously that was seven.

So, you know, look, that's probably taking people taking a bit longer to think about things and not jumping or acting as quickly. But hey, look, the average is still pretty quick, right? So that's still pretty good. Yeah.

I mean, you've had such a big run, right? Is there starting to feel that the Perth market's in some sense a little bit getting a bit of affordability stretch for people under current interest rates?

Obviously, rates have jumped a few times now and, you know, that higher for longer is sort of baked into the market a little bit versus rate cuts of, say, 25. Yeah.

Yeah, and you sort of, you know, how are you sort of then also trying to guide clients around how to, you know, protect?

Because, you know, obviously Perth's had a great run, but also had some tougher years and, you know, while you maybe, you know, were a BA at the start of that, but you're obviously tracking the market and working and investing in the market.

So you would have a lot of experience of knowing those times. How are you sort of, you know, I guess, helping people just make sure that it's just be a bit extra careful at this stage?

Look, every suburb is different. Every price point is different. So it's a lot of different micro markets in Perth at the moment. So look, 60% of the stock at the moment is below 1 million, so under the median price.

So there's probably a lot more of that cheaper sort of stock available than the premium stock.

So I think if we're buying under a million dollars, I'd be certainly a lot more cautious as to what we buy, a lot more selective, probably pushing back a lot harder on the agent and pricing, especially like when you've got sort of inexperienced agents who have been involved in a tough market as well.

So I'll be using that to our advantage and really trying to beat them down on price, especially if they haven't got a lot of offers, right? So that's one side of the coin.

On the other side of the coin, where you've got the higher price properties, $1 to $2 million is still very, very tight. There's still not a lot of options. Inner to middle ring suburbs of Perth, still very tight. Listings are very low, not many options.

And again, $2 to $3 is the same, and the $3 and above is also quite tight. There's not a lot of options.

it's interesting like we'll look at properties at you know three to four million dollars and it's still 30 groups through those properties because they're very limited stock and lots of people trying to move into those areas so so if we're pretty confident on an area on a property on a price point if we're pretty confident we've seen enough market evidence in the last say two weeks we're confident on pricing then we can push a bit harder on a pre-market or off-market opportunity

Sometimes we'll see a property and go, you know what, we haven't had that market feedback around this property in this area on that price point. Hey, look, let's let it go to market and see what the market sort of dictates.

And one happened recently in a very good inner city suburb, which has been super hot over the past two or three years. The initial price that was offered to us a little bit high end. I thought, you know what, that's probably a little bit high.

Let's go to market and see what the market comes back with. To be honest, it's probably about 150 grand lower than what they initially said you could have it for. So going to market was actually a good thing.

Obviously, the budget changed a lot of investors out of the market. I mean, how do you sort of see that playing? Obviously, it's, you know, your clientele will shift, you know, more owner occupiers, et cetera.

But, you know, for the past investors, particularly ones that have been wrapped up in the last sort of last six years, I mean, a lot of them were targeting those lower price points or, you know, often not using local BAs like yourself. They were using sort of investment specialists.

How do you think that's going to play out?

Yeah. Look, I mean, investors as a whole have obviously pulled back quite a bit since budget. So largely driven by a, you know, what's my strategy now? Yeah, before was buy and hold, negatively geared, a couple of growth.

But now we've got to rethink strategies and how do we move forward in this current market? And everyone's different, right? So some people need negative gearing. Those who need negative gearing to invest, they're either going to buy something that's brand new or they're going to build something, buy and build.

So they've got to find ways of how they're going to get negative gearing going forward. Also, as we're probably aware, that negative gearing will also reduce people's borrowing capacities as well. So it's taking into account all those situations.

Other investors go, okay, these new changes haven't been legislated yet, so let's wait until they come in and legislate it before we make any decisions. So they're on the sidelines at the moment. They ought to be a bit more cautious.

Then you've got the other investors who, okay, I was buying under a trust. Is that the best way to buy now? Do we think, do we buy under a company name? What's the best way to buy? So I think largely our investors that we've got on board

They're the three kind of different areas that they've kind of had to stop and think about. So they're on hold effectively, not completely gone.

We've had maybe one or two that have completely decided to pull the pin because, hey, look, property investing is going to work for me at the moment, the way that the budget changes

are made so there is those but generally um yeah people are those three sort of factors of course we've got about 23 of our investors still moving on and they're still proceeding because the the budget changes won't affect their strategy or how they're sort of set up

We have a lot of owner-occupiers, so that's a big part of our business. And I suspect we'll see more demand in that area.

But look, I think still for investors, buy and hold strategy in a good area, looking for a couple of growth value-add strategies, subdivision, all those kind of things, there are more opportunities. It's going to be a case-by-case basis because

Not everyone can afford, say, to buy a property, then develop further to get some more income through a greater flat, a second property, retain and build, knock down and build two or three properties. So there's real value in all those areas. It's really going to depend on investors' budgets and strategy, I guess.

Yeah, you're finding though that, you know, if you think about not just current investors in there, I mean, you know, what the new strategies post-budget, but more the, you know, the ones that have sort of bought over the last three, four, five years.

I mean, you know, I guess there was just a lot of demand, right? It was the hotspot of the country, maybe not a year ago, but, you know, typically sort of two to four years ago.

I mean, where do you feel like that potentially they were stretching into markets maybe they shouldn't have or,

know potentially go a bit too you know did you have it i guess a belief of that you know maybe not what you'd do if you you know yeah you advise your clients but you could see that a lot of investors were going to certain pockets and you know potentially pushing up markets you know you know i guess you know at a greater rate than say what the locals would have potentially expected

Absolutely. And we're seeing it now. So I think a lot of buyers, East Coast buyers, especially who aren't from Perth, they know Perth, pushing their clients into these sort of some $800,000 properties, probably the outskirts of Perth.

Now, the issue, we've always avoided those areas because the issue there is too high of investors in those areas, right? So a huge proportion of investors.

And probably the last three or four years, I'll be curious to see the next census data, but I suspect that would have gone up a lot more as well. So we're probably seeing a lot of inflation in those property prices because you've got an influx of buyer's agents, influx of investors.

You know, it's funny that people, a suburb that was good maybe three or four years ago, people are still buying it because of Google search or they hear from their friends. And so that suburb's grown, it's flown, it's gone past it. But people are still buying in there.

So I think we're now starting to see a lot of investors pulling out in those markets. and we probably start to see higher stock levels in those markets.

Now, if you've got an existing property that's tenanted in those suburbs, it's going to be a real struggle to find a buyer for it because, you know, ideally it's going to be more related around or suited to first home buyers or local owner buyers. So I guess now that's a tenanted property,

Investors aren't buying existing properties that are talented as much. So your market's really reducing. And also you're competing against all these other investors that are trying to sell. So I always felt, oh, my investment strategy has always been buying a market where there's lots of owner occupiers.

Yeah, you're competing against owner occupiers, but they're always going to be buying in that market. You don't want to be competing against investors.

that because when it goes to sell then competing gets them selling as well i find with owner occupiers look things are a bit tougher they'll make do they'll they'll stretch as much as they can to keep their property the last thing they want to do is sell the house they live in right so if you're in a good area that's always going to be in demand with owner occupiers people moving into the area uh you always have demand for those areas

It's a good point. So what you're saying is that you mentioned earlier, I think it was 60% of the stocks under a mill, but you're finding that particularly in those sort of areas, I agree, I can't wait for the next census data. Only every five years, they don't release it.

It takes a while for them to release it. But yeah, I mean, and why that's valuable, right, is you see the owner-occupier rate and you can see how much that shifted over five years. And maybe it was driven by owner-occupiers before, but a lot of the recent growth was investors.

And I think that's one of the best data points you can get. Sometimes hard with rental bonds and rental listings. It's really hard to know unless you sort of, and you can know by just being on the ground, but it's nothing like raw data that you want.

But I think what you're saying is that you're now starting to see the listings in these areas starting to increase because investors are starting to decide to bail, take their money and run. But it's been driven by investors and new investors aren't buying there.

Now you're starting to have a bit of a problem because owner occupiers aren't really there on the same scale. And you start to see a repricing, more listings and not enough buyers. Is that sort of what's happening?

No, absolutely correct. And I think, look, the first homebuyers, they're the ones that the government's been targeting for this sort of price point in space. But the problem is with them at the moment, they've lost a bit of confidence.

So they're not sort of not as aggressive as they were as well, probably, you know, three, four, five months ago, right? So they've lost a bit of confidence as well in the market. So, you know, they're going home over and they're seeing, you know,

five or six groups and why not pushing to put an offer in? Whereas before they were seeing 30 groups.

Yeah, that's another really good point actually, Peter. I think often people don't think about that, right? Because you're right, there's a lot going on in the world, right? There's a lot happening, interest rates, inflations, war. And then you're right, they're already a bit nervous because, well, I've got to pay this for this.

And, you know, prices have gone up and, you know, first time buyers are already nervous, right? It's a big thing. It's a huge decision for them. And, you know, unless they feel like there's this sort of real need to buy now, this urgency, a lot of them are,

When you are feeling like that, you don't rush to make a big decision. And particularly if you are taking a 95% loan, it doesn't take a rocket scientist to figure out that you are borrowing and you are taking a risk. And I think you're right.

I think a lot of first-time buyers, if they've got a bit more choice, they're like, oh, hang on a sec, there's no pressure for me.

maybe they start looking at other areas and they always want that sort of... And so, yeah, if the first-time buyers aren't buying, the investors are selling, there are new investors there, there's a complete different sort of pendulum here.

Whereabouts, I mean, where are you sort of, you know, are you talking more just the sort of the outer rings of sort of Perth here? Like, is it both north-south? Is it, you know, west? Is it, you know, up or down further, up and down the coast a bit more?

Like, where are you seeing that those... those particular markets you get a bit nervous about for your clients? Obviously, you've been avoided in many ways, but where are you talking?

Yeah, probably the north outskirts, I'd suspect, would be, of what I've seen, a little bit more stock there, take a bit longer to sell. Probably that kind of southeast corridor that's been really popular with investors over the years, that certainly I've seen a huge number of listings in there.

And then probably more the sort of southern areas as well. Again, we've seen a lot of investors in those areas. And unfortunately, investors have been a big portion of the market, the buyers. So now you've taken them away. Maybe, look, we're seeing a bit more stock come to market because investors are selling.

But also we've seen buyers producing the market because the investors aren't there anymore.

Yeah, and then I think they're attracted, the new ones, right, because they're attracted to the new builds. And so after these areas are recent builds. That's right. And, you know, why would I buy a recent build when I can buy a brand new build?

And, you know, it's particularly if the price difference, plus I get all negative gearing, depreciation and lower CGT. And so any investors are there probably going to get, who want that type of property is probably going to get sucked to... Have you seen sort of a bit more releases of...

sort of you know the building you know how is the building market over there i guess i mean there's been a challenge all over the country to to get feasibility to stack up but you know obviously prices have gone up a lot um building prices have got up are you finding that a bit of a building boom what's happening

Look, there is a lot of building going on. I mean, obviously, the government set a housing accord, which we're not achieving as it is. I think we're 5,000 probably short every year at the moment.

So I think by putting investors now into the new build space, they're creating a bigger problem because we couldn't achieve what we could previously. And now we've got putting more demand in that space when we're going to fail it by even further.

And it's also going to put pressure on pricing for land and also for building as well. So I think we're going to see some increase in costs on new builds because there's going to be more demand in that space.

I'm already seeing a lot of advertising and spruikers with house and land packages, of course, and we'll probably start seeing a lot more of that as well. So this budget's really giving them sort of fuel, hasn't it, really? Which is a bit of a worry because a lot of these...

Characters are, you know, not always above board. You think they're waiting for you to do the right thing for you, but unfortunately, they're taking commissions from everyone along the block. And they're getting paid by you as well, which is pretty disappointing. But unfortunately, we do see a lot of that.

So you've really got to be careful when you're buying a house and land package, where they're putting you. Is there an area with a lot of new supply? Is there going to be a lot of new supply coming? Is there more competition?

So even from the rental space, if you've got, you know, all of a sudden you're buying a new estate and you've got kind of 50% investors, you're competing with them with rental properties as well, right? So don't believe all the figures that you're given. You need to see the hard evidence as well.

Yeah, so then we'll shift into maybe the owner-occupier conversation.

I mean, how do you sort of, you know, obviously Perth's got such great population growth at the moment, you know, there's a lot of confidence around, you know, the city and, you know, it's sort of had some tougher times and now all of a sudden it's back in the spotlight.

How are you sort of,

know guiding he's still finding there's still a desire to sort of upgrade people you know naturally you know as kids get bigger you know their family wealth gets higher their incomes are still strong like there's still this upgrader there um or you know still people moving back from overseas to perth people moving from east coast to west coast for the job opportunities or family um yeah how are you sort of guiding people on this sort of home buying journey i guess

Yeah. So, look, I mean, the demand on the owner-occupier side has always been strong. It's probably been strong since, you know, around 2019.

Just, you know, obviously stock levels have really come down and opportunities have really dried up for owner-occupiers, especially when they're already looking in, you know, one or two or three areas for different reasons, you know, schooling or work or just where the family is, etc., So that space hasn't really changed.

There's always been demand from owned occupiers, especially in that sort of, you know, probably $1 to $5, $6 million space. It's quite buoyant. So lots of people trying to buy in those areas. There's always people looking to upgrade.

You know, people have been sort of trying to buy for the last couple of years. They kept getting priced out or, you know, too much competition and missing out. So you still have, you've got to remember, you know, last year, We can see sometimes 15 offers on a property, right?

A family home, it's crazy, right? You've had like one or two properties on the market in a particular area. Now, you've got then 14 people that missed out. Now, some of those people decide, you know what, this market's too hot, it's too hard, I'll sell the sidelines.

So those people who sell the sidelines, look, they haven't watered properly. They haven't sort of met their objectives, but they've sort of sat back, go, I'll wait till the market's cooled off a little bit or there are more options. Now, there aren't a lot more options, but yeah, certainly they're

Isn't that frenetic pace that there was six or 12 months ago, that's for sure. So I think we're still seeing those people in the market. We're still seeing those upgraded suburb people. So, you know, people will be at a lower sort of price point market.

They want to move into a better area, closer to the coast, closer to the river, closer to kids' schools, closer to transport. So they've seen a pretty big increase in their property prices, right? So they're still interested in upgrading the suburbs. And then we've still got quite a few people moving to Perth.

overseas interstate for work opportunities. So that hasn't changed at all. So it's still quite strong. So look, the aerospace is still strong. We don't expect that to change. Look, the fundamentals haven't changed. High population growth, still got low stock levels right at the moment we're about 5,700 properties.

Now I've got to remember 60% of those are below 1 million, right? So 5,700 properties for sale. A balanced market in Perth is probably around 12 to 13,000. So we're miles away from a balanced market, right? So it is still a seller's market.

Yeah, I mean, if anyone wants to sort of just jump on, SQM is just one portal, right? It's one way. You look at it and you go, wow, it is tight. And so what you're highlighting there is that, and listings matter, right? Listings are really by choice.

You know, if demand drops off and listings are really high, a real problem. If listings are really low and demand drops off a bit, well...

not as a problem right the whole marginal buyer and um however it can be micro markets which is kind of what you highlighted before you can easily see pockets of markets where listings and buyer demand drops at the same time and um or you know vice versa and um you can create little sort of you know points where growth is slow i mean have you found that um you know when you sort of think about the next hour out of sort of perth i mean a lot of investors went to places like rockingham and

you know, like a really a bit lower down the price point because how do you feel about these markets and versus say, you know, the inner ring, you know, real owner-occupier driven markets, you know, how do you feel about that?

The good thing about the southern suburbs around the Rockingham, yeah, look, probably investors are probably, again, dried off down there because they're not buying those established properties so much anymore. I mean, there are still investors looking at properties that are probably close to positively geared or, you know,

maybe not as negative as that. If you buy property for say $600,000 and get $600 a week of rent, that's pretty good, right? So it's pretty close to positive.

So there are going to be those maybe smaller properties and bigger block or even strata properties in those areas that are still going to be popular with investors. But the good thing about the Rockingham area is we do have the Orcas project that's happening.

So that's going to provide a lot of demand in the area. Obviously, it's going to be a bit of a boom in terms of construction and workforce. So I still think that sort of pocket of town is still good. They're still going to have some long-term demand, provided it all goes ahead.

There's been a few rumblings around that. But I think at this stage, it's all going ahead and there's going to be huge investment in the area.

Has there been any major shifts in, you know, by preferences over the last few years?

I mean, you know, has everyone still wanted to be on the Cottesloe, the Scarborough, you know, up and down the beaches or, you know, inner city life to want to live in sort of around the Subiaco's or, you know what I mean? Like, is it what you thought it was going to be?

Like, if you come back to when you started as BA, and what people really wanted then and what people want now.

Is it very similar, but maybe they've, you know, explored a little bit to the sort of south and the south in the eastern suburbs because of price, but before they weren't looking at those suburbs. Like, is there any major changes?

Yeah, yeah, it's an interesting one because I had a client probably about five years ago. They, you know, older couple, they were sort of selling two properties and buying one. They had no real preference for any particular suburb.

So I did, normally I'd do kind of for investors or people moving, owner occupiers who don't know Perth, I'll probably do narrow down six suburbs based on the areas I want to be in. Could be school, work, Those kind of things. But these guys want a real broad brush.

Look, so I probably did about 15 or 20 suburbs for them, right? North and south of the river, based on where I thought was the best place to buy at the time.

And recently I looked back at that report that I did for them and looked at this on the pricing and all those prices have almost pretty much doubled in those areas that I recommended. So I think, look, things have performed the way we thought they would.

The demand in the areas that we thought would do really well have done really well. Some have done better than others. But in general, the good areas have done really, really well. And the demand there today is still very, very strong. So that hasn't changed.

What had happened five years ago, these places are undervalued. That's why they're so cheap. And that's why I've seen so much price growth. So look, in Perth, where big drivers are ocean, water, river, all close to the city. They're the big main drivers, right?

So I think COVID's probably given us a bit of lifestyle changes where people want to be further out of the city and a bit more land, a bit more space. But we've probably seen a change in that as well recently as well. So there's not as much people doing that. But

Yeah, look, I think, yeah, like I said, water, it's very, Perth is very unique. I think the only other city in the world that's as similar to Perth is Las Vegas because we're very, very coastal.

So we kind of track about six kilometers to the north and about 70 kilometers to the south, right? And we don't go very far inland. So that's because of our love of the coast. Now, there's a suburb in, say, Iluka in Perth's north.

That's around 30 kilometres from the city on the coast, and it's got a median price point of 1.8 million. So when we get people coming in from the east coast, they go, I'm not paying that much money to live that far out of the city, but there's a premium on the coastal suburbs.

People will pay over that to be able to walk down to the beach.

Yeah, I mean, I've been up to some of those beaches. They're pretty stunning beaches, though, aren't they? Yeah, I mean, I haven't spent too much time on the West Coast, but I've spent a few weddings and, you know, work and things like that.

And I think when you do go a bit of exploring on the coast, you're like, wow, it is absolutely stunning. And I think, yeah, I mean, you can see why it's just so desirable and it's such a great place to live. It's more gentrified, more work opportunities.

But when you think about the city... What are some issues that you can see that have popped up? I mean, we talked about house plan packages and investors, but obviously the apartment market, has it got off the ground there?

Have you seen any issues with freeways or infrastructure that is making it harder to live? As the population grows and cities grow, there are challenges that sort of pop up and make some pockets more desirable, make some pockets less desirable. How are you sort of sitting?

What are some of the growth challenges at Perth at the moment?

Yeah, I mean, look, traffic is certainly seeing an increase in traffic, especially in those sort of northern suburbs, because it's one of the fastest growing region in Perth.

I find with freeways, especially we've got one main freeway that goes north, you know, you could build that double the size of a slew of traffic. So I think, you know, In Perth, we haven't been used to public transport as much. People ask me, what's it like catching a train?

I don't know how to catch a train through these areas. So we have been more focused on the cars. So I think there needs to be a bit of a shift in our thinking about, look, we need to catch public transport.

That's the most efficient way of getting people from one place to another. So one area I think we need to do better on and probably will be some growth challenges is our free railway that go east west as well. Currently, they're going to pretty much north south.

So I think we need to start seeing some more of these kind of east west railway lines as well.

just try to connect more suburbs to the the main railway line and then make it easy to catch a train because at the moment if you're living you know five ten ten minute drive from the train station you need to catch a walk to the bus stop catch a bus go to the train station catch a train we're gonna make that a little bit easier especially in winter people don't want to do that right so if we can make trains closer to where we live

then I think we'll see more people start using that as well. And then it might be a short, you know, two or three or five minute bus ride to the train station or either a 10 or 15 minute ride in the bus station.

So I think they're one of the main, I think, sort of growth challenges and something we probably need to invest a little bit of money into and a bit of a mind shift as well from the locals, I think, is a big thing.

um uh apart from that i think you know in general we have seen some infrastructure growth in terms of of new railway lines you know elbrook line i've got the airship railway line um extra thorny line so there's been some some good sort of initiatives and good infrastructure changes there from the state government but

certainly some more work to be done in those areas when you think about the um i mean the locals probably know what they want you know especially after ones that are a bit older they have lived in different properties they know what they like or they don't like they've gone visited their friends properties like you sort of learn the hard way i find um property you know you just get more experience the older you get but you know when people move from other cities

Where do they go wrong in Perth? What are some of the common mistakes you find that, you know, not locals, even if they're older or younger, like what are they? And they sort of get too excited for certain parts or types of properties.

Like just what are some of the things you just notice when you drive around? They just didn't know that.

So one thing I notice is they look at location. Being in Perth, growing up in Perth, knowing Perth, we're kind of a little bit sort of biased, I guess, in some better areas than others. So I'm not going to pay $2.5 million in this particular area, right?

Whereas you get someone coming from the East Coast or overseas, they go, well, this suburb is... 8km from the city, we're close to the river, close to the freeway. And they don't have that bias of like, you know, I don't want the suburb.

For me, it's not a cheap suburb, it's a good location, it's a big block, a good property, and they're able to pay that money for it. They see the value in that, as the locals in Penrith don't. Now, going down the track, you know, things get balanced out. Do they lose value?

I would say they probably will because the local buyers aren't necessarily spending their money in those areas, right? The other thing is, the big thing I think as well is, not all parts of every suburb are the same. So, you know, take South Perth, for instance, where I live.

And not every part of South Perth is the same, not every part of South Perth is the same price.

So you can't look at a particular property in one part of South Perth and look at another one in another part of South Perth and go, well, that's the price, because they're very different parts and they're different prices. So it's very important to understand that as well.

And obviously the demand is very different as well in different parts of each suburb.

What do the locals in Perth just go nuts for though? I mean, you mentioned the suburbs, I think that's a really good local knowledge, right?

you know, there's a real bias or inherent value that locals will put on this part of the freeway or this walking to the beach that you maybe aren't factoring in, you know, it's 500 metres down the road, but it's a long 500 metres, right? So what are some of the property points that,

You know, obviously north rears are valued a lot in the east coast and maybe not as much in Brisbane as it is in Melbourne, for example. But what are some of the things over the local market there?

Definitely north facing rear is always popular over here as well. And you do get more of that sort of sunshine all year round. But it's not a... Some people have a higher preference than others, I guess.

Others don't mind, but some people, it's a non-negotiable, so they really want that, and they have to pay a little bit more for that.

I think, yeah, you look at the western suburbs, being within walking distance of the beach is quite a big factor, and we see quite a big difference in price points as well. So, obviously, the closer you are to the beach, the more the value, the more you pay, whereas if you're sort of

You know, pick Cottesloe for an example, you know, on the Marine Terrace is the most expensive properties. You go back one street and two streets, the values will start to drop incrementally. So again, you're not buying, if you're buying in Cottesloe, it's not the same value in all the suburb.

You go on the outside of the railway line in Cottesloe, it's going to be a lot cheaper and a different price point as well. So I guess we do have those idiosyncrasies in Perth. And it's very important to understand where people see that value.

And you've really got to have that sort of, you know, when you're desperate, when there's not many options, people are prepared to sort of take risk or sort of bend the rules a little bit to get into a property.

But you've got to remember, longer term, you may not have that same demand for that property in the area at that price point. We've probably seen some areas where people can't afford to get into a particular suburb. And we've seen these sort of neighboring suburbs really take off.

And it gets to a point where they've taken off that much that there's more value in the original suburb to begin with.

this suburb is too expensive, let's look at the neighbouring suburbs, they're quite cheap. And then everyone's looking at the same suburb, paying a lot, and we're seeing record prices in that suburb.

And all of a sudden it gets to a point where, hang on, it's now actually cheaper to buy the original suburb, which is a more premium suburb, and let's everyone refocus on that. So that's been some interesting, those things I've seen in the Perth market as well.

I think you're absolutely, that's right. The bridesmaid suburb and it becomes the premiums. Hang on a sec. I'm paying a lot for this suburb compared and the gaps get there and everyone's just back. So you're absolutely right. It takes a while for that mindset to sort of get back, doesn't it? Yeah, absolutely.

Peter, it's been a good chat. Obviously the Perth market and if everyone's moving over there, I think you're in very much safe hands with Peter and the team and I appreciate you coming on today.

No, absolutely, Chris. Appreciate the conversation and thanks for having me on.

Thanks so much for listening today. We hope you got lots of value out of it. If you'd like to speak to our guests today, there's links in the show notes on how you can get in contact.

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