Why Invest in Perth?
Perth maintains its reputation as a stand out destination for property investors both local and afar, thanks to our resilient market that has shown strength after strength since the pandemic and continues to grow.
There are many factors a property investor must weigh up when deciding where to invest, and this blog outlines some of the key considerations and how Perth compares as a destination of choice.
Vacancy Rates
Vacancy rates describe the percentage of available rental properties which are vacant at a current moment in time. Low vacancy rates infer that there is high demand from tenants in comparison to the amount of rental stock available.
Perth has hit an all time vacancy rate low, recording just 0.6%. That’s the lowest we’ve seen in 40 years, and shows just how limited tenants are with their choice in rental stock. Perth also holds one of the lowest vacancy rates in the country, with Adelaide reporting similar figures.
Investors want to be sure that they will be able to find and retain tenants to avoid missing out on rental income. Perth conditions in the rental market have been extremely competitive over the last three years, especially with our growing population, thanks to migration and the return of expats.
Investors can be confident that there will be no shortage of enquiries for their investment property in Perth for the foreseeable future.
Rental Returns
The pressure faced in the rental market has had direct implications to the value of rental prices across the state. The cost of renting in Perth grew 11.2 per cent during 2022, averaging $553 per week.
Some suburbs have seen growth of almost 30%, with rental yields well above 6% reported for houses and almost 10% for units. These values have been attractive to Perth investors, giving them the benefit of steadier cash flow.
As competition continues in the rental market, tenants continue to offer above-asking prices to stand out from other applicants, giving investors the opportunity to earn positive returns on their investment.
Property Values
Perth property values have also been influenced by strong market conditions, with values increasing almost 4% this year alone. While property values have grown, Perth remains one of the most affordable capital cities in the country according to Real Estate Institute of Australia (REIA). The median house value in February 2023 was $587,274, compared to $1,217,308 in Sydney and $897,222 in Melbourne. This is good news for investors looking for more affordable properties and to still expect sustained growth as our market continues to show signs of strength.
Population Growth
For the 2022-23 financial year, the Australian government set a target of 195,000 new entrants to Australia. As there are large backlogs of applications yet to be processed, it is estimated that the actual figure may exceed 220,000.
Last financial year, WA welcomed over 20,000 new arrivals and it is estimated that this value will increase this coming year, thanks to a number of policies coming into effect that will further incentivise overseas arrivals. This will place additional pressure on an already extended rental market, giving investors confidence about making positive returns in Perth.
We work with almost 2,000 property investors, who are capitalising on the current market conditions we are seeing in Perth, regarding their investment property values and rental income. Our experienced team can guide you through the investing process, identifying opportunistic suburbs, conducting feasibility reports, preparing your property for lease and finding you the perfect tenant.
Contact us to organise a private discussion about your investing goals or book a complimentary strategy call with our CEO Rebecca Halton.