Exploring the factors behind the Perth property boom

Perth city view during sunset

If you’ve been following property news, you’ve probably seen a number of articles proclaiming Perth as “Australia’s hottest capital city property market” and a “‘hunting ground’ for property investors”.

So why is Perth getting so much attention, locally and interstate? In this blog, we explore the factors that have contributed to the Perth property boom, as well as things to consider before investing.

Why is the Perth property market booming?

1. Strong economy

WA’s Gross State Product increased by 3.5% in 2023, surpassed only by SA and NSW. This was driven by positive performance across all WA industries (particularly mining), except for retail, which is still suffering due to cost of living pressures.

On another positive note, WA unemployment remained low and steady at 3.8%. This bodes well for the state’s economic outlook, with high employment rates meaning that people are making more money and have higher levels of disposable income. As a result, they are better equipped to invest in property.

2. Population growth

In the first half of 2023, over 73,000 people moved to WA. At the same time, the state is building approximately 14,000 new homes per year. Based on analysis by REIWA CEO Cath Hart, 30,000 new homes are required to house these new WA residents, indicating demand is being drastically underserved.

This disparity is likely to become more pronounced as time goes on, with building timelines slowed down by labour capacity, supply chain issues and infrastructure costs, and building approvals increasing only marginally despite huge demand.

Combined with existing local demand, this undersupply of housing has seen property and rental prices increase significantly, with no sign of slowing down.

3. Affordability

Though Perth renters and property hunters are undeniably feeling the squeeze, the city remains one of the most affordable places to buy property in the country. This is borne out by the proportion of family income needed to meet loan repayments, which was 34.5% in WA at the end of the September 2023 quarter, compared to 56% and 45.1% in NSW and VIC, respectively.

At the same time, WA mortgage repayments are among the lowest in the country, with TAS and the NT being the only state and territory with lower rates.

4. Sales prices and rental yield

There are a number of factors driving property prices in Perth, including limited supply and a slowdown in the construction of new homes. This has created a sweet spot for sellers where prices are high enough for them to clear a healthy return on their property, but not enough to be prohibitive. As such, there is a lot of competition between buyers and little room for them to negotiate prices, creating a seller’s market. By the same token, rental prices have continued to rise due to an incredibly tight rental market, with vacancy rates remaining historically low (0.7%) at the end of 2023, leaving tenants little room to bargain.

All that being said, Perth’s median house selling price ($595,000 at the end of 2023) is still among the lowest in the country, surpassing only Darwin at $590,000. Compared to the east coast, especially Sydney and Melbourne ($1,578,000 and $934,000, respectively), this makes Perth particularly appealing to interstate buyers who may be looking for a more affordable seachange or to invest in a property market with impressive rental yields.

Doing your due diligence as an overseas or interstate investor

The factors we have looked into all indicate that the Perth property market is prime for investment. Nevertheless, it’s important to approach any investment decision with both eyes open. Make sure you undertake your own due diligence, especially if you’re not familiar with Perth’s prevailing property trends.

Further, while east coast investors have been disproportionately buying up property in outer metro areas like Armadale to capitalise on rental yields, the pendulum is bound to swing back eventually. Why? Many of these purchases are converting owner-occupier dwellings into rental properties. This means more properties are entering the rental market, which will ultimately have a negative impact on the rental yields that justified the purchase in the first place.

All that is to say, though it is a great time to invest in Perth property, prospective investors should approach any purchase with an awareness of the ebb and flow of the property market.

If you are interested in entering the Perth property market but are unsure where to start, we’re here to help. Get in contact with us; we’d be happy to help you with any questions you may have.

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Shirley Smith

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We are, and have always been, a family-run enterprise. Founded by Shirley Smith in 1995, the idea for Access Property Management was conceived when Shirley realised there was a high level of demand for dedicated property management agencies, a need that was not being met by the existing real estate market. The agency is now headed by Shirley’s daughter, Stacy Whiting, who joined the business in 1996, and her husband, Mark Whiting, who has been at the agency for over 18 years. This focus on longevity extends to Access’ dedicated team of qualified property managers, with most staff having worked at the agency for 9 years or more.

ORIGINAL FOCUS

Shirley’s original objective was to provide a closer link between property owners and high quality tenants provided by relocation companies and the corporate/executive sector. Over time we extended our services to better cater for the needs of all property investors and quality tenants, who were seeking a higher level of service, focus and experience.

27+ YEARS EXPERIENCE

For over 27 years, our family owned business has made an impact within the real estate industry in Perth Metro and based on our results we’ve established a strong reputation for integrity, distinction and innovation in real estate and management services.

Meet our team of dedicated property specialists.

“I have rented through Access twice since 2010 and both times have been great, particularly the last time when I rented in South Perth and my rental agent was Kelly Duncan. What a delight she was and is and nothing was too much trouble. Thanks Kelly for such a great experience. Shame I couldn’t stay with you.”

Vanda – South Perth – Facebook

“It is always fantastic to deal with Stacy and the team at Access Property Management. Highly recommend to anyone!”

Anike – Facebook

“I have been using their services as a tenant, and I can say its an amazing experience. They are prompt at everything and quite helpful. Alongside, the property manager carry a great professional work ethics which is wonderful. You, as a tenant always feel accompanied by your property manager. Cheers.”

Rahul – Google

“Many thanks for your help.  I have a couple of other properties and you guys are by far the easiest to work with and most professional.”

Dean – Owner

“I rented a property through Natalie at APM. She was attentive, proactive and professional – everything you could want in a property manager (as a tenant and as a home owner, as I am myself also). I highly recommend APM, their professional staff and convenient services.”

Daniel – Mt Pleasant – Facebook

I would like to personally thank Kelly for her professionalism and pleasant manner when we were applying for a rental. My son Jarrod (18yrs) & daughter Nicole (22yrs) had been applying for rentals all of January with no success & I was disappointed that some of the agencies hadn’t even followed up on their good references to allow for a fair assessment of their application. As Kelly would know we were successful in this application but had to decline as we were also successful in purchasing a property in that same week. Kelly was very understanding and a pleasure to deal with. I will highly recommend your agency .

Heather – Prospective Tenant

“Mark, Stacy and the team at Access you are a pleasure to do business with. I highly recommend to anyone that requires high level, professional property management.”

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