Matthew Hughes, Managing Director at Capital Property Advisory
July 29, 2021
In recent years, owner occupier buyers have dominated the Perth housing market, however changing conditions have seen investors begin to seize attractive opportunities.
With property values rising much faster than incomes, low-income earners and first home buyers will eventually be priced out of the market; however, to date we have seen first home-buyers leading the charge in Perth, accounting for a nation-leading 36.3% of all owner-occupier transactions.
At the same time, however – with continuing low interest rates, rental scarcity and growth in rental values – investor lending is up by nearly a third between the first and second quarters of 2021. The median rental price has climbed 16.7% in the past 12 months – second only to Darwin in terms of capital city rental price growth.
It is clear that many astute investors are taking advantage of Perth’s opportunistic buying environment and its potential for growth and above average yields.
Local investors can currently earn significantly more in the Perth property market than they can in other asset classes and given the lack of affordability on the east coast, Perth is becoming a darling for interstate investors too.
Looking to the future, many investors are seeing signs of continuing capital appreciation and return on their investment.
While our vacancy rate has crept up slightly from its recent 40-year lows, Western Australia’s economic future in general is looking strong; low unemployment and positive net migration together indicate that the current tightly held rental market is likely to persist this year.
Moving into 2022, we expect to see rental stock numbers rise as the impact of State and Federal government building grants is felt. Many of these new home builders will be vacating rental properties which should bring some much-needed balance to the market.
Despite this, with WA’s population growth the second highest in the country, we’re likely to see demand outstripping supply for some time to come.