Ashfield WA Property Investment

## 1. Investment Verdict We recommend a Buy for Ashfield, WA, with the single most important number justifying this being the 3-year growth forecast of 13.5%. This indicates a strong potential for long-term capital appreciation.

## 2. Market Overview The median house price in Ashfield, WA, is $818,000, while the median unit price is $763,462. Over the past year, prices have grown by 5.9%, and over the past 5 years, the compound annual growth rate (CAGR) has been 3.2% per year. Although days on market data are not available, the 5.9% 1-year price growth suggests a seller's market. For buyers, this means they need to act quickly, while for sellers, it's an opportune time to list their properties. The market cycle is cooling, but the vacancy trend is improving, which could lead to further price growth.

## 3. Rental Market The vacancy rate in Ashfield, WA, is a low 0.9%, indicating a very tight rental market. The median weekly rent is $730, resulting in a gross rental yield of 4.6%. With a rental demand rating of "very high" and an owner-occupier rate of 70%, investors can expect strong competition for rental properties. This means that investors can potentially achieve higher rents, but they need to be prepared to act quickly to secure tenants.

## 4. Short-Term Rental Opportunity Although the median nightly rate for short-term rentals is $223, the occupancy rate is not available. However, with a low vacancy rate and high rental demand, it's likely that short-term rentals could perform well. Assuming an occupancy rate of 70% (a conservative estimate), the estimated annual revenue for a short-term rental property would be around $56,000 per year (based on 365 nights per year and $223 per night). In comparison, the estimated annual revenue for a long-term rental property would be around $37,960 per year (based on $730 per week and 52 weeks per year). This suggests that short-term rentals could be a more lucrative option, but investors need to consider the higher management costs and potential regulatory risks associated with short-term rentals.

## 5. Infrastructure & Growth Drivers The METRONET (Perth Rail Expansion) and Perth City Deal are currently under construction and delivery, respectively. These infrastructure projects are likely to drive demand for properties in Ashfield, WA, particularly with the Ashfield station only 0.5km away. The limited development pipeline and low supply pipeline also contribute to the potential for price growth outpacing new supply. The unemployment rate of 5.5% is relatively low, which should support rental demand and property prices.

## 6. Bull Case If conditions hold or improve, the upside scenario for Ashfield, WA, is significant. With a 3-year growth forecast of 13.5%, the median house price could increase to around $1,033,000 (based on the current median house price of $818,000 and a 13.5% annual growth rate compounded over 3 years). This represents a potential capital gain of around $215,000 over the next 3 years. For investors, this could result in a total return of around 26% per year (based on the potential capital gain and a 4.6% gross rental yield).

## 7. Risks Although no significant risk factors have been identified for Ashfield, WA, there are some potential risks to consider. The vacancy risk is low, given the 0.9% vacancy rate. However, the single-employer dependency risk is not a concern, as the suburb is located near Perth's CBD and has a diverse employment base. The supply pipeline risk is also low, given the limited development pipeline. The rate sensitivity risk is a potential concern, as interest rates can impact property prices and rental yields. However, with a gross rental yield of 4.6%, investors can potentially mitigate this risk by targeting properties with strong rental demand and limited supply.

## 8. The Play For investors looking to enter the Ashfield, WA, market, we recommend targeting properties in the $700,000 to $900,000 range. A minimum yield of 4.2% should be targeted to ensure a reasonable return on investment. Investors should watch for signals such as changes in the vacancy rate, rental demand, and infrastructure development. The recommended strategy is to hold for the long term, given the strong potential for capital appreciation and rental growth. Investors should also consider diversifying their portfolio by investing in a mix of property types and locations to mitigate potential risks.

This analysis is for informational purposes only and does not constitute financial, legal, or investment advice. Seek professional advice before making investment decisions.