Perth's potential enticing investors

Investors are starting to sharpen their focus on Perth, with buyer’s agents reporting a sharp increase in enquiry from out-of-state residents keen to capitalise on the Western Australian capital’s price growth potential.

With Perth houses having recorded 3.9 per cent price growth over the past three months, and properties being relatively affordable as the city emerges from its prolonged downturn, interstate investors are showing increased interest.

At buyer’s agency Momentum Wealth, enquiry from outside of WA’s borders was up 164 per cent in the final quarter of 2020, with the investor interest complemented by buyers looking to relocate to Perth.

“For investors who have benefited from recent upswings in their own market, there’s certainly a great opportunity to leverage WA’s affordability and enter the Perth market to take advantage of its respective growth cycle,” Momentum Wealth buyer’s agency team leader Emma Everett said.

“I think many investors are now recognising this could be a time-limited opportunity.”

Ms Everett acknowledged that while conditions were becoming ideal for interstate investors, area and property selection would remain a crucial factor in making a successful investment.

“Particularly in a recovering market, not all areas improve at the same rate, and there are some locations that may not have the right factors to support strong capital growth, so it is still very dependent on suburb and even individual property selection,” she said.

“Likewise, we have seen that performance can also vary quite significantly depending on property type, so our advice to investors is to buy selectively.”

That view was shared by Riskwise Property Research chief executive Doron Peleg, who said units, particularly those in areas of high supply, carried a higher level of risk than detached houses.

Mr Peleg said units in Perth were generally not attractive to families or owner occupiers, while lending restrictions had also dampened demand. 

“COVID-19 has further increased the risk associated with rental apartments, with investor demand likely to shift towards detached houses,” Mr Peleg said.   

“For the foreseeable future, units in WA, particularly new apartments in ‘danger zone’ areas (such as Perth 6000), carry a higher level of risk.” 

And unlike other markets, demand for regional housing in WA is expected to remain relatively low.

"In the absence of strong growth drivers and with sufficient supply of housing, the capital growth in those areas is likely to be modest," Mr Peleg said.

With that in mind, national buyer’s agency BuyersBuyers.com.au co-founder Pete Wargent said prospective Perth buyers needed to be well organised and well  researched, but also would be well served to act decisively. 

“Listings in Perth are now lower than a year ago, and there is now real potential that the coming decade could be a strong one for the resources sector, as global stimulus pumps up demand for commodities” Mr Wargent said.  

“A big change this year has been that investors are coming back into the market, so there’s competition for quality property coming from all angles, and rental markets are tightening to the extent that it’s become cheaper to be a buyer from a renter, at least from a cash flow perspective. 

“There’s every chance that Perth is heading into another genuine property boom period.” 

Also see: https://www.apimagazine.com.au/news/article/5-perth-suburbs-set-for-big-rebound/