The current state of the property market in Perth represents a unique scenario for investors. While data reveals a surge in investor loans compared to owner-occupiers, there has not been an equivalent increase in the number of properties available for rent.
The question then is, where are investors putting their money and how does this affect rental supply?
Investors bet on Perth
The growth in the number of new loans issued for investment purposes surpassed those for owner-occupier properties in 2023, according to the Australian Bureau of Statistics (ABS).
This trend has continued into 2024. ABS’s January lending indicators showed the number of new loan commitments for owner-occupiers up 15.3% from December. This is compared to new loan commitments by investors which rose 57.4%.
There is clearly growing interest from investors in the Perth market. But further digging into what types of loans investors are getting reveals more.
Investors favour construction
Data from the Real Estate Institute of Western Australia (REIWA) shows that there is strong interest by investors in new construction in particular. REIWA saw a 21.0% increase in the number of loans for land in 2023 and a 52.7% increase in the number of loans for construction.
While this is good news for the future of Perth’s property supply, construction takes time. This will not have an impact on Perth’s housing supply in the short term.
Investors and the rental crisis
In February, REIWA CEO Cath Hart said, “Our tight rental market needs every property it can get, so it is good to see investor loans increasing.”
The rental vacancy rate in Perth is currently at a record low. Domain’s latest data shows Perth’s rental vacancy rate at 0.3% for February.
This low vacancy rate coupled with the increase in construction loans leaves a more immediate possibility for savvy investors: purchase existing homes and turn them into rentals.
By capitalising on available stock (up 7.7% from January to February according to PropTrack), investors can bridge the gap between current tenant demand and the future influx of new constructions.
Plus, when you factor in the fact that rental rates in the city have increased 67.0% since the start of the pandemic according to PropTrack, property investment in Perth could be a good strategy.
Interested in buying an investment property in Perth? As an expert Perth buyer’s agent, Resolve Property Solutions can help. To discuss your options, book a free strategy call with Peter Gavalas.
