Real estate investors are considering diversifying into Perth’s real estate market to take advantage of the city’s affordability and robust rental yields.
According to the latest report from Momentum Wealth, the first quarter of FY 2022 saw a 108% increase in interstate applications for Perth properties compared to the previous year.
Jennifer Wakeman, CEO of Momentum Wealth, said many of these real estate investors hail from Australia’s east coast and are drawn to Perth’s strong capital growth prospects.
“The uptick in investor research is being driven by the greater affordability of the Perth market amid mounting cost concerns in the Sydney and Melbourne markets in particular,” she said.
The Housing Affordability Report from the Real Estate Institute of Australia (REIA) for the June 2021 quarter named Western Australia the most affordable state to buy property.
The affordability report found that households need just 26.5% of their income to meet loan repayments, significantly lower than 43.9% in Sydney and 35.6% in Victoria.
“Investors looking to Perth not only benefit from more affordable access to the market, they also get more for their budget in terms of land value, property size and proximity to the CBD – all key drivers of capital and rental growth.”
Higher rental income, tighter inventory
Compared to the larger property markets on the East Coast, Perth’s gross yield is firmer at 4.4%.
Perth’s rental yield is one of the highest of any state, surpassing Sydney’s 2.4% and Melbourne’s 2.7%.
“There is no doubt that the real estate market in Perth is in a good place for investors as they now have the opportunity to leverage both returns and growth as the market continues to recover,” said Ms Wakeman.
However, it seems that the current growth phase in Perth has already shown some small sign of easing.
Still, Ms Wakeman believes that certain factors, including the widespread skills shortage in Perth and continued low housing supply, will fuel the continued upward trend in the market.
Figures from REIWA showed that the number of listings for sale reached the weekly average of 8,513 in October, almost half the peak of 16,969 reached in November 2015.
The 52,100 job openings in the state are likely to put further pressure on shrinking housing supply.
“The limits on cross-border movement make it challenging to recruit interstate at present, but as the borders open up there will be more interstate migration of skilled merchants and professional workers to fill positions, which will put further upward pressure on demand. to housing and prices,” said Ms. Wakeman.
“Many East Coast investors recognize this and are eager to diversify their real estate portfolios and enter the Perth market while keeping the values affordable to leverage this capital growth.”
Rental stock is increasing
The latest figures from the Real Estate Institute of Western Australia showed 2,351 rental properties in Perth in the week ending Nov. 19.
This represents a growth of 3.7% from the previous week and an increase of 10% from a month ago.
Rental activity also increased in the same period, by 2.2% or approximately 670 let properties.
Photo by George Bakos on Unsplash.
Top Suburbs: Reservoir, Brisbane South, Campsie, Coburg North, Lalor Park
Get help with your real estate investment
Do you need help finding the right loan for your investment?
When investing in real estate, it is important to ensure that you not only have the lowest available rate you can get, but also have the right loan features for your needs.
Fill in a few details below and we’ll have a local mortgage broker contact you to find out what features or loan types are right for your needs. We even help with the paperwork. Moreover, an appointment is free.