Investors eyeing off Perth property potential

Data from an annual property sentiment survey by property investment consultancy Momentum Wealth has revealed where Australian investors are turning their attention in 2021.

The survey collated the views of 467 property investors from across Australia, and 48 per cent of survey respondents chose Perth as their preferred investment location over the next 12-months.

Momentum Wealth general manager Jennifer Wakeman said that tight stock levels in both the sales and rental markets were combining with strong buyer demand to help drive up prices in the western capital.

 “The median price in Perth has risen 10 per cent since July 2020, and this strong growth is beginning to attract the attention of various segments of buyers, especially intestate investors who are looking to benefit from opportunities outside their home markets,” Ms Wakeman said.

Why Perth offers a compelling investment opportunity

As the price point for entry into the Sydney and Melbourne markets continues to creep upwards, savvy property investors are looking towards more affordable markets such as Perth in order to capitalise on the opportunities they offer.

The Perth market is at the beginning of its growth phase, leaving investors well positioned to benefit from the full breadth of the market upswing. 

The Real Estate Institute of Australia’s Housing Affordability Report for the March quarter highlights that Perth was once again the cheapest state across Australia to purchase property. 

Only 24.8 per cent of family income was required to meet loan repayments, well below the 43.5 per cent of income needed in NSW and 37.3 per cent in Victoria.  

“Investors who may be priced out of the eastern states markets are being attracted to Perth as it provides a unique opportunity to invest at a lower price point,” Ms Wakeman said. 

“Where investors in the eastern markets may be restricted to limited property types and areas at their budget, these investors may be able to benefit from access to properties closer to the CBD with larger land content in Perth, which can present additional development opportunities that they wouldn’t otherwise be able to realise.”

The Perth market is also offering investors a dual opportunity, thanks to low rental stock and rising demand among tenants, conditions which are combining to drive up the median rental price and offering attractive rental returns. 

Houses in Perth are offering gross rental yields of 4.4 per cent, well above the 2.7 per cent and 2.9 per cent yields offered in the Sydney and Melbourne markets, according to CoreLogic. 

What do buyers need to know when investing in Perth?

While the Perth market is currently offering investors the dual benefit of capital growth and strong rental yields, low stock and high levels of buyer demand are combining to make for competitive buying conditions.

“Our buyer’s agents are regularly seeing in excess of 50 groups of prospective buyers at home opens, and they’re often competing against multiple offers,” Ms Wakeman said. 

“We’re closely monitoring the market and are being strategic in our contract clauses to position our clients as well as possible during negotiations, and we have also secured some great off-market deals recently.”

Ms Wakeman said suburb selection remained crucial for buyers wanting to achieve above-market capital growth and rental returns. 

“We are still seeing differences in demand and supply levels across individual suburbs, with some areas still struggling with oversupply as well as oncoming stock, so area selection remains critical for those looking to benefit from the upswing,” she said.

Another factor that buyers need to be aware of is suburbs recovering off a low base. 

Despite showing signs of strong short-term growth through median price increases, some of these suburbs are only recouping value that has been lost in recent years, and there may be underlying market factors that will impact long-term capital growth in these areas, so it’s important to read data with a critical eye.

Ms Wakeman said access to strong local market knowledge will be key for investors in ensuring they’re making informed decisions and positioning themselves to leverage the great opportunities the Perth market is offering. 

This article is a sponsored content collaboration with Momentum Wealth, a multi-award-winning property investment consultancy based in Western Australia.

To speak to their team in more detail about the current opportunities in the Perth market, fill out their contact form to organise a no-obligation phone consultation with their property experts.

You can also access their annual property sentiment report here.