Interstate investment guide to purchasing a Perth property
Over the past few months, Perth has been experiencing a property boom, with many East Coast and international buyers snapping up properties in WA’s capital.
As such, we have put together a guide to real estate investing in Perth for East Coast buyers, particularly those from Vic and NSW. In it, we address the core differences that exist between the respective property markets, with a specific focus on methods of selling and legislation.
Sales methods
When it comes to buying a property in Perth, selling methods can be quite different from those practised on the East Coast.
First though, let’s look at what these real estate markets have in common. Private treaty sales occur along both coastlines. This method of selling permits the buyer to make a conditional offer on a property, such as the offer being subject to the approval of financing or the sale of the buyer’s current property.
In Perth, private treaties are the most common way to sell, and while they still exist on the East Coast, buyers there tend to prefer auctions. This is because of a selling tactic called “gazumping” that impacts private treaty sales on the East Coast. Basically, a seller engages in gazumping when they accept a higher offer on their property, despite having already accepted another offer. Compared to private treaty sales, auctions provide a higher degree of certainty for East Coast buyers — once the auction result is announced, the seller can’t go back on it.
Gazumping is not permitted in Perth — the only instance where a seller can choose to reject an offer they have already accepted is if the offer is subject to the sale of another property and there is a 48-hour clause included in the contract. This 48-hour clause can be invoked if the seller receives a better offer, which means the initial buyer will have 48 hours to remove the conditions from their offer.
Because private treaty sales are more reliable in Perth, auctions are less appealing. This is because they generally require offers to be unconditional, meaning you can only make an offer if you have financing pre-approved or cash at the ready.
Legislation
Different states also have their own distinct legislation around buying and selling properties.
Cooling off period
On the East Coast, private treaty sales are subject to a five-day cooling-off period. During this time, buyers can withdraw their offer and pay a small penalty fee, usually a percentage of the purchase price. In contrast, auction results are final.
There is no cooling-off period in WA. The only exception is if the offer was conditional and the conditions were not met.
Contracts
While standardised contracts tend to be used across WA’s real estate market, this is not the case on the East Coast. Sellers will usually work with solicitors to build a contract that is favourable to their interests. As a result, buyers can end up in a difficult position if they sign a contract purposefully designed to mislead them.
In contrast, WA’s use of standardised contracts, developed by REIWA, creates a higher level of confidence for buyers and sellers, ensuring they are both on the same page. This leads to a smoother sales process.
Tenancy laws
Though the recent changes to WA’s Residential Tenancies Act are bringing the state’s legislation more in line with that of East Coast states, there are still some core differences.
For example, no grounds evictions are still allowed in WA for both periodic and fixed-term leases. This is also the case in NSW but not in Vic. Similarly, notice periods for lease termination differ from state to state.
Find out more about the recent changes to WA’s tenancy laws here.
Perth property market
Perth property prices are significantly lower than East Coast prices, but the difference in median rental prices is less substantial, meaning rental returns in Perth are much more appealing. This is one of the key factors driving the state’s property boom.
If you’re an East Coast investor looking to get into the Perth property market, it pays to work with a property manager who is familiar with the local market and rental ecosystem.
At Access Property Management, our family-owned business has over 29 years of experience helping property investors get the best returns on their rental portfolios.
If you’re thinking of making an interstate investment in the Perth property market, or have a question you’d like to ask, we’re always happy to help. Get in contact today.
Article Source: Interstate investment guide to purchasing a Perth property