The Property Investment Brief: Perth, Australia

Where next to invest? We profile property hotspots around the world, detailing everything an investor needs to know.

The Essentials

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House Prices
Property prices rose 1 per cent in March 2017 (CoreLogic).
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Returns
Average rental yield in Perth is 2.9% (RP Data).
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Demand
Perth makes up 1 in 5 enquiries for Australian real estate on TheMoveChannel.com.

Where is it?

Perth is the capital of Western Australia, a state known for its wildlife, natural landscapes and old culture. It is also popular with tourists for its pristine coastlines, with Perth’s northern coastal road given the nickname the Sunset Coast. With more sunny days than any other Australian capital city, it may not be Sydney, but Perth’s international airport and stunning backdrops add up to their own appeal.

Who lives there?

Perth is a very popular location among younger people, with hotspots such as East Perth particularly sought-after by professionals aiming to work in the city. With an average age of between 20 and 39, and with two-thirds of the market made up of single households, it is a hub for young workers, notably managers, hospitality workers and those in the technology sector. As a result, a high proportion of the area’s population are tenants – 62 per cent of households are rented, with only 15 per cent fully owned. In other words, the city has the fundamental base of a reliable investment market.

Cape-Peron,-Perth,-Australia

Why invest?

Australia has become one of the most sought-after real estate markets in the world, thanks to several years of rapid capital growth. According to CoreLogic, capital city dwelling values are currently growing at an annual rate of 12.9 per cent – the highest yearly increase recorded since May 2010. This is primarily fuelled by the cities of Sydney and Melbourne, two of the four capital cities now showing an annual price increase of more than 10 per cent.

Indeed, nine out of 10 people who sold a property in Australia in the final three months of 2016 made a profit, with a total of $18.8 billion generated in returns over the quarter.

Perth’s property values have declined 4.7 per cent in the last 12 months, continuing a downward trend recorded since the market’s 2014 peak. The market has seen a rise in supply along with a slowdown in demand, thanks to the end of Western Australia’s mining boom, which has weighed on house prices. However, as the economy diversifies into sectors such as tourism, demand will begin to rebound and supply will falls, pushing prices back up: according to CoreLogic, house prices rose month-on-month in March 2017.

The city’s decline in property values also hides variation between Perth’s suburbs, with agents reporting plenty seeing prices rise, despite others falling more quickly than the market’s median. Research by Hotspotting found that Perth is home to Australia’s most consistent suburb for property sales, with areas such as Willetton, Wanneroo, Stirling, Melville and Armadale highlighted as stronger, resilient markets. According to data from Domain, meanwhile, although house prices have continued to slide, unit prices have risen in 2017 to date.

East Perth, in particular, is a suburb with potential for investors, with new infrastructure projects helping to boost the area’s appeal. Last year, the Perth City Link’s Perth Busport was completed, marking the second stage of the major transport project. Burswood’s new Perth Stadium is also on course to be open for the start of the 2018 AFL season, with Chelsea football club set to play an international friendly in the venue next year. With property values more affordable than the heated markets of Sydney and Melbourne, and with prices starting to show signs of growth, Perth is a property market not to be dismissed out of hand by long-term investors.

Who’s Investing?

Investors from around the world are snapping up Australian real estate, with Chinese buyers leading the way: investors from China spent $24.3 billion on Australia real estate in 2014-15, more than triple the amount spent by US investors. American buyers are the second biggest group, followed by Singapore, Malaysia and South Korea. Japan and Canada are also significant players in the Australian market, with UK buyers an important presence too, thanks to the steady flow of UK expats keen to experience life Down Under.

Agents say…

“With Sydney property prices so high, investors should not rule out Australia’s other real estate markets.”

 

Find out more:

View all properties for sale in West Australia

 
 

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