There are many factors that investors consider when trying to stay ahead of the property market; current market conditions, livability, rental yields, and infrastructure among them. While there are those that follow the flock to where property prices are up, savvy investors know the key to success is to be anti cyclical.
And at the bottom of a cycle right now lies Perth, a market that has seen two years of slow decline which have left prices at an all-time low. Many researchers and financial advisors have commented that the Perth market has bottomed out, and with interest rates at an unprecedented low, is tipped for a recovery.
There are four key factors that have Investors looking West.
1. Median Price
While the median cost of an apartment in Sydney is $822,500, and $480,000 in Brisbane, the average price in Perth is more palatable at $405,417. This, in conjunction with previously mentioned low interest rates, opens the market up to entry-level investors and owner-occupiers. Perth also doesn’t have the state government stamp duty levy imposed on foreign investors, further increasing value for money for overseas buyers.
Another significant market driver is Perth’s increasing population, which is growing at the fastest rate of any capital city in Australia and is set to overtake that of Brisbane by 2028.Forecasts by the WA Planning commission show that the highest growth in household types will be lone person households and couples without children, which will result in a need for more small dwellings in high amenity locations.
3. Supply vs. demand
While current and future infrastructure plans support this growth (such plans include the creation of the $1bn Perth Stadium, the $1.3bn Perth City Link and the $1bn Gateway WA), new apartment developments appear to be lagging. There were only 4,530 new dwelling approvals for apartments in Perth in 2014/2015. When compared with the 24,308 approvals for Melbourne and 29,477 for Sydney, it’s evident investors are in a unique position to buy now at the bottom end with potential for huge demand in the near future.
4. Employment, education and liveability
In addition to incredibly advantageous market conditions, Perth benefits from a thriving employment and education sector. Perth is home to more ASX listed companies than Melbourne or Sydney, and has been the strongest performing economy in the nation over the past 10 years. In 2015 Perth was ranked the 8th most liveable city in the world, receiving the highest possible scores for health care, education and infrastructure. The University of Western Australia is ranked in the top 1% of universities world-wide, and Perth is on track to become Australia’s performing arts capital.
While naysayers bring up the decline of the mining boom when discussing Perth (which will be discussed in a follow up article soon), Perth is undoubtedly primed for a comeback. The only question that remains is whether investors will cotton on quick enough to take advantage and ride the next wave of capital strength.