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Perth: the other City of Light

Catherine Deshayes

The city of Perth in Western Australia has witnessed sky high prices of late, and although they are now falling due to current market conditions, rental returns are still soaring, making Perth an excellent prospect for long term investment. TheMoveChannel.com takes a look at the potential of Australia's fourth largest city...

Perth became known as the City of Light in 1962, when astronaut John Glenn flew overhead on his earth orbit and the city's millions of lamps glittered beneath him.

Fast forward 46 years and Perth's house prices have also sky rocketed. In line with massive population increases - Perth is currently the fastest growing area in Australia - property prices boomed in 2006 and 2007, increasing by 50 per cent.

The fourth largest city in Australia, Perth is home to 75 per cent of Western Australia's (WA) population. It is hugely popular with migrants, especially those from the UK, who make up around 13 per cent of the population. One third of Perth's population was born in another country. Recently released Australian Bureau of Statistics figures also predicted that Perth's population would double over the next 50 years.

Perth offers a good, Mediterranean style climate, (hot summers and temperate winters) strong employment prospects, high standard of living and proximity to stunning beaches. The city's location on Australia's west coast is also closer to the UK than any other part of Australia. Its strong economy is attributed to impressive deposits of metal ore, coal and oil.

As Perth is such an isolated city it used to enjoy highly affordable property prices but increased accessibility, improved employment prospects and earning potential has encouraged a strong inward national and international migration and a rise in demand for property in Perth.

The wealthiest suburbs, and the most popular with migrants due to their beachside location, are to be found in central and northern Perth, in the coastal suburbs from Trigg to Mindarie. Other popular suburbs include Beldon, Connolly, Edgewater, Mullaloo and Ocean Reef, where beachfront properties command serious money. 

Now, in line with the current market conditions, the property market is now slowing, but, according to the Australian Real Estate Institute, it is still a good prospect for long term investment.

The property market in Perth is likely to continue growing strongly in the long term, according to the Real Estate Institute of Western Australia, (REIWA) with the median price of a Perth apartment (£180,976) now more expensive than a similar apartment in Sydney (£178,904) according to Australian residential statistics expert Residex.

REIWA said, "Whilst in the near future the market may ebb and flow, prospects for further ahead are extremely positive.

"Homebuyers looking at the medium to long term should have no doubt of the positive outlook for WA's property market," REIWA added.

As house prices fall at the moment, rental rates are increasing fast. Experts warned that the massive rise in house prices in recent years could not be sustained, and the bubble does appear to have burst for the short term. WA house prices peaked at the end of 2007 when the Perth median price reached £216,000 prices have now dropped to £202,820.

Meanwhile, rents have grown over 20 per cent a year and are still rising sharply. Median rents in Perth have now climbed to £155 per week, while the vacancy rate is still dangerously low in many Perth neighbourhoods. Rents still rose by £4.50 per week in June of this year, with a median of £159 per week for a house and £145 per week for a unit.

As is to be expected, property prices have dropped in line with current market trends. The economic forecasting house BIS Shrapnel are predicting poor growth through to 2010, when the increased demand and wage growth should start to see property prices on the up again.

However, if you take a long term view and are buying a property for future capital growth or rental return, you could be sitting on a gold mine.

Browse property for sale in Perth.

Picture by Robert Whitehead