Smart Money

Reporter: Graeme Butler

With the ups and downs of the real estate market - interest rate predictions - sliding markets - booms and busts - what do you do - where do you look for the next big thing - it might surprise you.

So what is the next hot thing - with Perth's market cooling off - Investors are eyeing off other cities - and top of the list is Adelaide... Gavin Hegney from Perth's Hegney property group, "we're seeing substantial exploration, mineral exploration in Adelaide and that's really going to flow through into their property market in the course of time they're going down the path we went through probably three or four years ago"

So what do you get for your money in the city of churches? - We went to one of Adelaide's leading agents to find out. Anthony Toop from Toop and Toop. "We're looking at about 360 - 370 at the moment and Perth I think is around the 460 - 470 and really we should be historically pretty well parity"

For the Perth average price of mid 400 thousands this is the sort of home you can buy in Adelaide - this property is in Golden Grove about 30 minutes from the CBD. Mark Shearer who works for Toop and Toop says it's the sort of place Perth investors are eyeing off - he should know he's just moved from Perth himself. "Perth has pretty much done its boom I think it would be fair to say I know the rates have dropped off by 20% and Adelaide is positioned to move from now but obviously waiting for something to trigger that interest rates coming down but at the moment we're set to go"

Like other cities in Australia apartments are attracting a lot of interest from investors - the Adelaide rental market is tight and offering good returns. "The amount of interest we're getting out of Perth is just quite astonishing because they're' looking at Adelaide and saying ti's cheat they can see the upside of what actually happened in Perth and so well pretty well everyone agrees that the whole package means that there's a real possibility that we could see some terrific growth over the next four to five years"

The other smart money is looking at Commercial properties in Perth as the mining boom puts pressure on the CBD - Travis Coleman from Propell "The commercial market has undergone significant growth in the last two to three years and due to the low levels of vacancy in the CBD the suburban office and commercial sites have become more prevalent and undergone significant growth sites such as Applecross, Stirling, Belmont and Claremont have undergone significant increases in value as clients and tenant seek alternative sites from the cluttered CBD and West Perth market"

If you're already buying your home in W.A and investing interstate isn't your thing - there's still plenty of options to consider. The cost of upgrading to another property can be high - on a $500 000 home - expect to pay $31,000 in stamp duty - settlement fees and the like - it's money you could instead spend on a renovation - "certainly renovations are a key and one aspect increasingly your properties wealth that you can go down"

According to Travis Coleman from Propell it's a good time to renovate but pick your target. "it's very important not to overspend when renovating your kitchen or bathroom and always you can talk to a local valuer or real estate agent to work out what added value will those areas have if renovated on your property"

Gavin Hegney says "if you like your home and you like where you are but you'd perhaps change a few things which many people are in that situation, then spending money on your home can certainly add value perhaps even the value the market is taking off your property so you can end up in a similar financial situation but in a better home to live in that's smart"

If you're looking at renovating the kitchen and bathroom are your big ticket items but they are expensive if you're just looking to add value to your house for sale there are cheaper and simpler ways to get a good return on your renovation dollar. One of the best returns is what you can see. Your floor coverings your paint - generally speaking you get about $3 per $1 back on every dollar you spend.

According to Gavin Hegney -

- Kitchen and Bathroom renovations will return $1.50 for each dollar spent - more if you do both.

- Rewiring won't make money returning just 25 cents

- A swimming pool while nice won't pay for itself - returning 50 cents in the dollar

- The big return is one of the simplest - do it yourself landscaping - it'll add $3 value for every dollar you spend

Now if you're not looking to sell - don't want to renovate and Adelaide's not your thing - you should still consider your position - is your mortgage working for you. Interest rates are never far from the minds of home buyers - but how you manage your mortgage is probably more important. "I think everyone should revisit their mortgage today in the market because the market has changed so quickly in the last 12 months anybody looking at reviewing their mortgage that hasn't looked at it for 12 months should do so today"

According to Gavin Hegney says it's probably not a bad time to fix interest rates for a year or two -

"if you want to fix for one or two years you're probably taking an interest rate which is slightly below today's variable rate now that may well be smart if we see interest rates rise again"

Gavin Hegney says right now according to commonwealth bank figures the standard variable is 9.44% - 1 year fixed is lower at 9.35% and 2 year lower still at 9.25% - but you'll need to check what's best for you and your plans, "it's really a bet on where interest rates going to rise or fall at this stage they're looking like they're on hold"

What ever you do with your property - or plans for investment - the smart money is doing something - be it - renovating - investing or just checking your mortgage is the best it can be. Anthony Toop says "Adelaide is not in boom now but the future over the next three to six months looks quite stable but look out if those interest rates drop and they're predicting maybe in February if they drop hang onto your hats cos I think we could be in for a great ride"