This article explores the factors that have contributed to the growing interest in property investing in Perth and the opportunities it presents.
The Housing Market in Perth: A Story of Resilience
If there is a term that would perfectly describe the Perth housing market, it would be ‘resilient.’ Even in the face of the downturn in Australia’s housing sector, Perth’s remained afloat with property values soaring at 25.9% and above from The Pandemic trough to July 2022 peak. According to the latest data from CoreLogic, the recent declines that Perth has seen are reported to be very minimal even amidst the notable price corrections in other Australian capital city markets. Following other reports, housing prices are starting to climb again toward new all-time highs.
According to OpenAgent.com Perth is seen to have relative housing affordability as it enjoys a uniquely insulated economy. The rising interest rates have had little impact on the housing sector compared to other capital cities. This helped the Western Australian capital manage the property downturn better.
The report also stipulates that Perth is rapidly selling homes. Its recorded Days on Market (DOM) is shown to be the lowest of any capital, sitting at just 23 days, with the current national average being 41 days.
In April 2023, the Perth median house price went up by 0.6%. This places the quarterly change back into the positive range of more than 1.1%. During the reporting period, the annual growth is also seen at a positive position, being at more than 1.5%. These figures demonstrate Perth as having one of the most robust housing markets in Australia since 2022’s downturn.
The following table details the unit prices in Perth as of April 2023 (From OpenAgent.com.au):
|Current Median Price
Australian banks predict that Perth’s housing market will remain impervious to market corrections in the following years. For instance, the National Australian Bank’s (NAB) forecast was revised from a massive fall in prices of -13.1% to a gain of over 0.1% this 2023.
Factors Affecting Housing Prices
Perth’s affordable housing market can be attributed to several factors. Firstly, the city experienced a downturn in the mining industry, leading to a decrease in demand for housing and subsequently lower prices. Additionally, the abundance of land on the outskirts of the city allows for the development of more affordable housing options.
Perth offers a range of suburbs that provide affordable housing opportunities. Suburbs like Armadale, Gosnells, and Midland have become popular among first-time homebuyers and property investors because of their relatively lower property prices compared to the city centre.
Rental yield is a key metric for property investors as it measures the return on investment from rental income. It is calculated by dividing the annual rental income by the property’s value and expressing it as a percentage. Higher rental yields indicate a potentially lucrative investment opportunity.
Perth has consistently shown strong rental yields, making it an enticing destination for property investors. The combination of affordable property prices and relatively high rental rates has resulted in attractive rental yields compared to other major Australian cities.
Because of the increase in Perth’s rental property values and gross rental yields, investors keep coming back. The recent data from CoreLogic shows that Perth’s annual change in rental rates to April 2023 went up by 13.2%. This is the highest among reports from Australia’s other capital cities.
Investor-Friendly Market Conditions: The Rise of Property Investing in Perth
Perth’s property market presents favourable conditions for investors. The affordable entry prices and potential for capital growth make it an appealing option. Furthermore, the steady increase in population and the subsequent demand for housing contributes to the overall stability of the market.
Growth Potential and Capital Appreciation
Property investors are attracted to Perth because of its potential for capital appreciation. As the city undergoes urban renewal and infrastructure development, certain areas experience growth in property values over time, resulting in favourable returns on investment.
Government Initiatives and Support
The Western Australian government effectively provides initiatives that would entice more parties to invest in properties in Perth. Here are two of them.
First Home Buyer Assistance
The Western Australian government offers various incentives and assistance programs to first-home buyers, including grants and stamp duty concessions. These initiatives make it easier for individuals to enter the property market, stimulating demand and benefiting property investors.
Property Investment Incentives
In addition to support for first-home buyers, the government provides incentives specifically targeted at property investors. These incentives include depreciation benefits, tax deductions, and exemptions, which enhance the overall financial viability of property investment in Perth.
Overcoming Challenges in Property Investing
While investing in property in Perth appears to be more than viable in light of the impressive rental yields, there are still some challenging elements in the deal that investors, may they be green or seasoned, should watch out for.
Market volatility is an inherent risk in any investment. Property investors should be prepared for fluctuations in property prices and exercise due diligence in their investment decisions.
Finding the Right Property
Choosing the right property is crucial for a successful investment. Investors should conduct thorough research, consider factors such as location, amenities, and potential for growth, and seek professional advice to ensure they make informed investment choices.
Property Management Considerations
Property investors must also consider the management of their investments. Engaging a reliable property management company can alleviate the burden of day-to-day property operations, such as tenant screening, rent collection, and maintenance, ensuring a smooth investment experience.
Perth’s combination of cheaper housing prices and high rental yields has captured the attention of property investors seeking lucrative opportunities. The affordable housing market, attractive rental yields, and potential for capital appreciation make Perth an appealing destination for property investment. With government support and various incentives in place, investing in Perth’s property market offers a promising avenue for wealth creation.
Is it a good time to invest in property in Perth?
Yes, with affordable housing prices and high rental yields, Perth presents favourable conditions for property investment.
What are some affordable suburbs in Perth?
Armadale, Gosnells, and Midland are among the affordable suburbs in Perth worth considering for property investment.
How can I calculate rental yields?
Rental yields can be calculated by dividing the annual rental income by the property’s value and expressing it as a percentage.
Are there any government incentives for property investors in Perth?
Yes, the Western Australian government provides incentives such as depreciation benefits, tax deductions, and exemptions for property investors.
What should I consider when choosing a property management company?
When choosing a property management company, factors such as their track record, experience, services offered, and fees should be taken into consideration to ensure effective management of your investment.