Looking across the Nullarbor – property in WA
With the media regularly reporting on the strength of the WA economy, investors are increasingly asking what makes for a good investment property in Perth, Western Australia.
After several years of slow sales activity, the tide has started to turn in the Perth residential market. House sales volumes have increased by 25% compared to the same quarter last year, and the stock of residential listings for sale has dropped to less than 11,000 properties (source: REIWA), a 30% reduction compared to 12 months ago. This drop in supply is not evenly spread across Perth – some suburbs have seen a reduction in stock levels of up to 49%. This understandably sees multiple groups of buyers at many home opens, with multiple competing offers becoming the norm, rather than the exception, in many quality locations.
The median price remains stable at $475,000, with preliminary figures indicating a rise in the June Quarter to $480,000 (source: REIWA).
The rental market remains under pressure with a low vacancy rate of 1.9% (a balanced market is considered 3%), and the median rent in Perth has continued to rise to its current figure of $430 per week ($440 for houses, $410 for units) – a 13.8% increase on 12 months ago.
The regional residential market remains patchy and does not mirror the increased activity seen in the Perth metropolitan area. Stocks of listings have not reduced by the same level as city areas, and some areas remain particularly vulnerable to the effects of oversupply moving forward. Regional rental vacancy rates vary widely and reach as high as 4%, with reduced rental increases in these locations. The northwest mining town of Karratha, which in recent years has been popular with investors due to sharply increasing rents, has seen a reduction in the median rent of 6.3% in the last 12 months. With the Pilbara Cities plan promising to deliver large amounts of stock to the northwest region, this reduction could be the beginning of a trend and warrants close monitoring for investors considering a mining town purchase.
What should investors look for in WA?
Increasing buyer activity, lower stock levels and a strong rental market provide investors with good reason to consider the WA property market. Despite the claims and marketing materials of property marketers, all properties do not grow at the same rate – so buyers should do their homework to locate and identify properties which will enjoy the benefits of consistently high demand, and low is supply, over the long term. Don’t have hundreds of hours to do the research required? An independent Buyers Advocate can provide advice and help you achieve the best possible result from your investment.