Caution When Buying A Hobby Farms

Caution When Buying A Hobby Farms

2 Mar 2018 shanekempton 0 Comment

With the start of autumn, a growing number of people living in Perth will start to focus on buying a hobby farms due to these properties becoming more popular during the cooler months according to Shane Kempton, Chief Operations Officer for Professionals in Western Australia and the Northern Territory.

Mr Kempton said that buying a rural property in regional Western Australia has become more affordable in recent years due to an overall correction in the Western Australian property market.

“In some areas of Western Australia, such as the South West, hobby farms have fallen in price by over $100,000 following the downturn of mining boom in 2014.

“A slowing land market has also meant that developers in regional WA have had to offer significant price discounts to attract buyers especially for developments that market hobby farms.

“The autumn and winter months are generally when the sales of hobby farms in a number of regional markets peak with most buyers coming from Perth.

“This is because the cooler climate and greener pastures encourage more people from the city to make an emotional decision to buy a small rural holding.

“However, making an emotional decision to buy a rural property can prove costly if the buyer does not undertake due diligence before making a decision to buy.

“One of the key factors to take into account when buying a small rural holding is the land value of the property.

Land value can be determined by a number of factors such as the location of property and specific infrastructure issues.

“Travelling distance to Perth is one key issue when considering the location and value of a property.

For example, the land value of a 2 acre property on the Perth side of York may have a higher land  value than a similar property further away because it offers faster travelling time to the metropolitan area.

“At the same time, issues such as services to the property can also have a major impact on its land value. Many people who buy a clear block of land in the country underestimate how much it can cost to have electricity connected to the home.

“A block which does not have any electricity provision within a close proximity can prove very costly over the long term even it is heavily discounted.

“Water is another issue that can impact on the value of the land. Properties that have water connected from Water Corporation are generally more attractive to buyers and attract a higher resale price than properties that do not have any on site water supply.

“However, if the property has a bore than can provide good quality drinking water, this asset will underpin the land value of the property.

“Rural properties that have easy access to major facilities located in a major regional town such as schools and shops also achieve higher resale value than similar properties located in more remote areas.

“Astute property buyers should also look at major infrastructure projects which might enhance the value of a small rural holding.

“For example, the rejuvenation of Midland over recent years with a major new hospital and shopping facilities has made the area more appealing to property buyers who live on hobby farms in the surrounding rural areas.

“In addition, the Perth to Bunbury Freeway has significantly reduced the travelling time to Perth for properties located nearby the route of the Freeway. As a result, small rural holdings within easy distance to the new Perth to Bunbury Freeway are proving more popular with city property buyers and this will have a positive impact on land values of these properties moving forward,” he said

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