Home

Why we are seeing the return of investors to the market

Ronald ChanSponsored
Finbar Chief Operations Officer Ronald Chan.
Camera IconFinbar Chief Operations Officer Ronald Chan. Credit: The West Australian.

Perth is currently Australia’s fastest growing major property market. It’s taken a long time for the Perth market to experience such strong growth, but recent numbers now show all the hallmarks of an impending boom.

Australia’s biggest bank – Commonwealth Bank – has just upgraded its housing market forecast, with its economists suggesting the Australian market as a whole is on the cusp of a boom, saying the surging momentum in the market and leading indicators point to strong price rises.

Investors and homebuyers alike are returning to the market with renewed confidence after COVID-19-induced market uncertainty, and it’s not hard to understand why.

Earlier this month, CoreLogic data revealed that Perth’s home value index lifted 1.6 per cent in January and 3.8 per cent compared to three months ago, making it the fastest growing major market in the nation.

Get in front of tomorrow's news for FREE

Journalism for the curious Australian across politics, business, culture and opinion.

READ NOW

reiwa.com data supported these findings, reporting that Perth’s median house price increased to $490,000 in January.

CoreLogic Head of Research Australia Eliza Owen said the surge in price for houses at the bottom end of the scale in the Perth market was primarily due to an influx of first homebuyers.

“In Western Australia in December, about 40 per cent of owner-occupier finance commitments were from first homebuyers, so that’s a really strong level of participation from that cohort and they generally go for more affordable properties,” she said.

The current median asking price for detached houses in Perth is $672,000, while apartments are $385,000. While this is still lower than the 2008 median house price for Perth, it’s on the rise in a significant way.

Christopher’s Housing Boom and Bust Report 2021 by SQM Research – a residential property data firm – forecast that dwelling prices for Perth would rise by eight per cent to 12 per cent this year. In fact, should all go well with the vaccine and everything returns to a semblance of normalcy, SQM Research predicts Perth prices will rise by 10-15 per cent.

Perth’s rental market is also on the up and up. According to CoreLogic’s Rental Market Review for the December 2020 quarter, Perth was one of the best performing capital city rental markets last year, with our vacancy rate hitting the lowest level recorded by REIWA in 40 years.

This trend is continuing into 2021, with

reiwa.com data showing Perth’s median house rent increased by $5 to $400 per week last month, while SQM Research analysis shows house rents in Perth rose 12.7 per cent in a year to $499 a week, while apartments increased by 10.4 per cent to $375 a week.

A combination of rising prices, low rental stock levels, low interest rates, expected gross yield growth and State and Federal Government grants is resulting in more and more Western Australians recognising that now is the time to buy.

Investor numbers are expected to increase even further next month when the moratorium on residential tenancy evictions ends after its year-long, post-COVID-19 life. This moratorium caused investors across the board to shy away from returning to the market, as they were disallowed by law from putting rents to market and evicting tenants who do not pay their rent.

There is now little doubt that the Perth market has swung into the seller’s favour and buyers are needing to act a lot faster to secure their property of choice.

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails