Perth was recently named the most attractive Australian capital city for investment by a panel of property investors.
We explore what’s behind their thinking and the factors that make Perth stand out as a great investment.
The survey results were released in February 2020. It asked more than 400 property investors about which capital city they saw offering the best investment prospects over the next 12 months. The results revealed that 37% of respondents said Perth.
The reasons behind this included improving rents, an improved economic outlook and relative affordability. We take a look at each of these.
1. Improving rents
As we recently highlighted, Perth rents rose in early 2020 for the first time in three years. The average Perth rent now stands at $360. This follows on from a long period of stability in Perth rental prices.
Rising rents are always good news for investors. But what’s even more pleasing about Perth’s rental market is how the average rent compares with other capital cities, when you look at rental yields.
In Perth, the gross rental yield is 4.2% according to CoreLogic. This compares with just 3.0% in Sydney and 3.2% in Melbourne. So if you’re looking to generate income, as many property investors are, Perth comes out ahead.
2. Affordability
On top of this, Perth property is relatively affordable by national standards. CoreLogic’s figures also show that the median Perth dwelling price is $442,691 compared to $872,394 in Sydney and $689,088 in Melbourne.
This means as an investor your initial outlay can be smaller and your money will go much further.
The gap between Perth and the Eastern capitals becomes even more pronounced in premium areas. For instance, apartments in the established inner-city Perth suburb of Northbridge sell for a median price of $430,000. A two-bedroom apartment in the inner-city Sydney suburb of Paddington would set an investor back more than $1.2 million.
3. An economy in transition
The property price surge in the early 2010s was driven by our State’s resources boom. Since it ended, property prices here have been flat or even in decline.
However, there were signs late last year that the WA economy has started to turn. Australia reported a record $290 billion in resources exports over 2019 with WA leading the way. This was also beginning to flow into other areas of our economy, with state demand growing by 1.9% over the year – the highest level in over five years.
While the full effects of COVID-19 on our economy aren’t yet known, Perth’s economy was showing genuine signs of coming back to life before the virus struck. Hopefully, once normalcy returns this will continue, as the world gets back to work.
4. The curve starting to turn
It’s also worth noting that Perth property prices also rose 0.3% in February 2020, meaning that they have avoided any falls for four straight months. This was a positive sign that the market may have bottomed out and the curve was starting to turn.
While Perth prices remain 21% below their peak, this looked like a good sign for investors looking to get into the market ahead of price gains.
Best performing suburbs for capital gains
With four key reasons to invest in Perth, we thought it was worth taking a look at some of the suburbs that have performed best over the past 12 months, according to REIWA data.
| Suburb | Median price | 12-month price growth |
|---|---|---|
| North Fremantle | $1,150,000 | 29.9% |
| East Perth | $1,300,000 | 29.4% |
| Carmel | $692,000 | 27.1% |
| Menora | $1,300,000 | 22.9% |
| Swanbourne | $1,750,000 | 22.3% |
| Darlington | $633,750 | 18.5% |
| Boya | $570,000 | 16.3% |
If you’d like to know more about investing in Perth property contact our experienced team of property managers today.
