Property investors generally need deep pockets to get into the East Coast property markets, despite the current downswing.
So it’s no wonder investors are increasingly looking west, with Perth a haven of affordability thanks to its median dwelling value of $561,000 in December 2022, according to CoreLogic.
Investors attracted by Perth’s affordability aren’t just being rewarded with exceptional value; they’re also enjoying some of the fastest-rising rents, highest rental returns and strongest capital growth prospects of any Australian capital city.
Perth’s vacancy rate at lowest level in 42 years
It’s not just investors who have the city in their sights.
Western Australia’s strong economy and terrific lifestyle are tempting many people to relocate – with the state’s population increasing by 1.3% over the 2021-22 financial year, according to the Australian Bureau of Statistics.
Given that the majority of new WA residents are settling in Perth, the city’s rental market has been under sustained pressure – with the number of rental listings falling to a 12-year low in December 2022, according to the Real Estate Institute of Western Australia.
This shortage of rental stock has seen Perth’s vacancy rate fall to its lowest level in 42 years, with REIWA’s data finding just six out of every 1000 (or 0.6%) rental properties were untenanted during December.
Tenants who do manage to find a rental are, naturally, paying more for the privilege, with house rents surging by 6% over the December quarter to be up 15.2% on the year, according to the latest Domain rental report.
Similarly, unit rents grew 2.4% over the quarter, taking the annual rise to 10.3%.
Soaring rents have pushed gross rental yields to 4.7%, eclipsing the average return investors get in Sydney (3.1%), Melbourne (3.3%), and Brisbane (4.2%).
What’s more, if you know where to look in Perth, you can achieve a return in excess of 4.7%.
What will happen to Perth’s prices in 2023?
Perth’s property market has proved more resilient than most other state capitals, with CoreLogic data showing values grew by 3.6% over the 2022 calendar year, despite successive interest rate hikes.
Many expect the positive momentum to continue over the next 12 months, with REIWA pencilling in growth of up to 5% supported by Perth’s affordability, impressive returns and housing shortage.
Want to buy 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.
