Investor strategies key to striking it rich in Perth's property goldrush

Perth’s investment potential extends beyond buying shares in the mining companies, with the Western Australian capital stacking up as a solid real estate investor target for the rest of 2023.

While strong population growth and infrastructure investment is putting pressure on the housing market, gold can still be struck if you know where to look.

In years gone by, Perth’s relatively high vacancy rate has been a concern for investors but according to the CoreLogic, Perth now has the second lowest vacancy rate in the country at 0.7 per cent behind only Adelaide (0.4 per cent) among the state and territory capitals.

This means many prospective investors are finding themselves overtaken by competition amid skyrocketing prices but if they can tackle the market conditions head on, they will reap the benefits of the low vacancy rates and rental price increases.

Finding gold in Perth's suburbs

As Australia’s second most affordable market after Darwin, many investors are flocking to Perth simply due to being priced out elsewhere.

However, on the ground, the highly competitive market sees properties being sold at home opens and prices being pushed up due to a combination of local and investor demand.

The number of properties available for sale in Perth fell to 5,181 at the end of July. This was 3.1 per cent lower than June, and 39.4 per cent lower than 12 months ago.

It is evident Perth did not peak at the same time as the other markets, predominantly in the first quarter of 2022, instead, it is at the moment setting new record price levels each month.

Perth’s property market from the onset of Covid to its cyclical peak rose 24 per cent compared to Adelaide’s 45 per cent.

But the WA capital's growth continues to accelerate as the national property price growth rate eases. Perth property just reached its record high at the end of June 2023 and yet remains the second most affordable capital in the country.

The July CoreLogic Home Value Index identified Perth as having the strongest increase in capital values for a capital city in Australia, for the 12 months to 31 July 2023, at a 3.4 per cent increase.  This tells us that the city is in a buoyant growth stage of its cycle.

On the ground, we are starting to see buyers hit the panic button, feeling like that are priced out or will just keep missing out.

Reminiscent of Sydney during the pandemic, properties are selling within days of hitting the market, often without buyers doing proper due diligence and at prices that typically can’t be substantiated by other recent sales. Every offer exceeds the one prior for a similar home in the area and it is driving prices sky high.

A three-bedroom, two-bathroom home in Beechboro in Perth’s northern suburbs recently sold within 24 hours of going to market, purchased sight unseen with an unconditional cash offer at the top end of the pricing range, which was pushing toward the $500,000 mark.

So how can a buyer get ahead of the other offers when there’s a feeding frenzy?

Here are some buyers agent tips to employ:

1. Be ready to buy and have your finance approval in place and deposit ready to go.
2. Know what you want and when you find it make a strong offer as soon as you can. Don’t try and low-ball or procrastinate or you will miss out over and over again.
3. Don’t skip the due diligence, make sure you still get pest, building and legal advice on the contract. If you miss out because you didn’t waive those rights, then the property wasn’t meant for you.
4. Know what the vendor wants in terms of settlement terms and conditions and if you can meet that it may make your offer stand out. Discuss with the agent things like shorter or longer settlement periods or letting the seller rent back if they haven’t purchased their next home yet.
5. Get very specific with your purchase requirements and make yourself known to all the agents in that area; they may just send you something that is pre-market or off-market.

Once you know your game plan, know where to look. If you are investing and can be flexible with location, you can push a little further out of the city to try and buy in an area that isn’t as competitive.