Why the years ahead could be a boom for Perth property investment
Australia’s property market has been a mixed bag lately. Whether it’s the macro movements since the COVID-19 pandemic upended everything in 2019, or property prices in this quarter alone, activity has been fluctuating.
It’s hard to forecast the future – but not impossible.
As Perth buyer’s agents and property investment specialists, it’s our job to stay updated on the latest property market movements.
So, while we can’t make promises about the future of property investment, we can attempt to sketch the shape of Australia’s property market in 2023 and beyond.
What’s happening in the market right now?
We need to take stock of the current situation to understand where the property market might go next.
The highlights:
-
Property investment in Perth is stable
-
Our strong economy and positive migration are insulating the market
-
Perth property is among the country’s most affordable
-
Interest rates are still rising
Prices dipped to near-record lows in 2020. As Perth buyer’s agents, we experienced first-hand how the COVID-19 pandemic slowed demand and depreciated property values.
But things have been looking up since then. Property prices surged almost 29% in a sustained upswing, with Perth hovering in the stable middle while Sydney and Melbourne went on a wild ride.
Towards the end of 2022, the number of homes sold was stable. Western Australia’s strong economy, relative affordability, and positive migration rates make Perth’s property market resilient.
A confluence of factors affecting property investment
Analysts say that a shortage of good properties, strong economic activity, wage growth and rising construction costs all underpin Australia’s robust property market. However, at the same time, the RBA has been aggressive with interest rate rises, dulling any potential spikes and somewhat stabilising the market.
Perth property remains affordable
As of December 2022, Perth is the country’s second-most affordable city, with a median dwelling price of $560,789. That’s around half the price of property in Sydney and less than 75% of the median dwelling value in Melbourne.
(“Dwelling” includes houses and apartments).
Looking ahead to the future of property investment in Perth
It’s going to be a busy couple of years for buyer’s agents in Perth.
While the rest of the country faces affordability issues, Western Australia’s insulated economy is keeping things relatively stable. Perth and Darwin were the only capital cities to avoid a decline in property values in November 2022.
Let’s look at 4 broad predictions for Perth’s property market in 2023 and beyond.
1. Low sale stock
The ratio of sales to new listings (i.e. demand to supply) has been steadily increasing nationwide since the end of 2019. When sales outstrip listings, prices rise sharply. However, as we are seeing in Sydney and Melbourne, sharp rises can lead to swift overcorrections.
Perth’s housing stock is low. According to CoreLogic, the sales-to-listings ratio is nearing historic highs at 1.2, and properties are selling in just 18 days. This could put upward pressure on property prices, although there are a multitude of other factors to consider, including:
- Perth’s relative affordability compared to other capitals
- The backlog of properties
- Certain suburbs are outperforming the broader market
- Overall sale stock is low
All summed up, the low sale stock and a high appetite for property imply that Perth’s property investment market remains competitive without experiencing crazy peaks.
2. Attractive affordability
Dwelling prices in Perth rose 3.9% in the 12 months to December 2022, offset by a 0.5% decline in the December quarter. Over the last decade, with all the ups and downs, Perth property prices have averaged 1% growth each year.
House prices in November 2022 averaged the lowest of any capital city at $585,989. Unit prices were just behind Darwin at $410,046.
Rental yield figures were also reassuring, with rent for houses increasing by 4.5% and units by 5.9%, driven by an incredibly low 0.4% vacancy rate (in October 2022).
All of this means Perth has become a great place to invest in property. As long as dwelling prices remain low relative to the rest of the country and our economic strength endures, there’s no reason that outlook will dramatically change.
3. More people calling Perth home
Western Australia’s population could tip over 3 million during this decade. The state saw its largest-ever quarterly net interstate migration gain at the end of 2021, with more than 13,000 people crossing the border.
For comparison, New South Wales and Victoria lost 54,466 residents and 31,726 residents, respectively.
All those people seeking serenity and space in WA need somewhere to live. Net migration and property investment go hand in hand:
- New arrivals typically rent first, which is contributing to Perth’s rental crisis
- Reopening borders is expected to restart overseas investment
- Perth’s housing affordability is contributing to interstate migration
Our Perth buyer’s agents help new arrivals settle in their forever homes. As the state’s population approaches 3 million, we look forward to helping locals (old and new alike) find their perfect property.
4. Market fragmentation
When we talk about “Perth property investment”, we are looking at the real estate market as a whole.
But remember, there are separate markets for homes, units, commercial property and subdivisions. And then there’s the suburb-by-suburb segmentation. Some suburbs are more attractive to Perth property investors owing to their strong outlook and newly established connections to the city.
According to Canstar, these are the 10 best Perth suburbs for property investors:
|
Suburb |
Median dwelling price (2022, REIWA data) |
|
Armadale |
$303,000 |
|
Baldivis |
$460,000 |
|
Brabham |
$499,000 |
|
Ellenbrook |
$450,000 |
|
Forrestfield |
$492,000 |
|
Hocking |
$569,000 |
|
Joondalup |
$590,000 |
|
Orelia |
$350,000 |
|
Waikiki |
$445,000 |
|
Wellard |
$435,000 |
Meanwhile, REIWA identified the 12 Perth suburbs most in need of investors. To compile this list, REIWA looked at the locales with the lowest rental availability and high growth rates for investors.
|
Suburb |
Listings for rent (May 22) |
Median rent price |
Median sale price |
Rental yield |
|
1. Southern River |
1 |
$500 per week |
$591,500 |
4.4% |
|
2. Leeming |
1 |
$600 per week |
$787,500 |
4.0% |
|
3. Parmelia |
1 |
$400 per week |
$307,000 |
6.8% |
|
4. Kingsley |
1 |
$520 per week |
$695,000 |
3.9% |
|
5. Caversham |
1 |
$500 per week |
$520,000 |
5.0% |
|
6. Lockridge |
1 |
$380 per week |
$332,500 |
5.9% |
|
7. Swan View |
1 |
$413 per week |
$410,000 |
5.2% |
|
8. Hilbert |
1 |
$468 per week |
$420,000 |
5.8% |
|
9. Manning |
1 |
$550 per week |
$827,500 |
3.5% |
|
10. Madora Bay |
1 |
$500 per week |
$570,000 |
4.6% |
|
11. North Beach |
1 |
$450 per week |
$985,000 |
2.4% |
|
12. Iluka |
1 |
$660 per week |
$950,000 |
3.6% |
The bottom line: property investment is a personal journey
There is no one-size strategy for property investment in Perth, which is why working with a buyer’s agent is so important.
Here at Multiply Property Group, our Perth buyer’s agent services focus on getting the best outcomes according to your investment strategy. We look at your goals, budget, lifestyle and wish list, and leverage our networks to find the best investment properties on and off the market.
Perth’s property investment market could be in for a period of solid growth. To ensure you’re getting the best price on your ideal investment property, contact Multiply Property Group to speak with our experienced buyer’s agents.