Western Australia The top pick for property investors across the country 2
MCG Quantity Surveyors managing director, Mike Mortlock, notes a seismic shift away from east coast property investment towards WA. Image: Canva.
  • Property investors buying in WA leapt from 9% to 32%, outpacing eastern states.
  • Favourable policies, population growth, and affordability make it a top choice for investors.
  • Population surge and affordability also key drivers of investment.

Perth’s housing market remains a hot favourite with interstate property investors, according to the latest data from MCG Quantity Surveyors.

Analysing their client data, MCG found that property investors around the nation have resoundingly chosen to put their money in Western Australia, with the state seeing a marked leap in property investment activity.

“It’s been really substantial and doesn’t look like slowing anytime soon,” said MCG managing director, Mike Mortlock.

“We compared client investor activity across the first quarters of 2022 and 2023, and this revealed a seismic shift away from east coast property investment.”

Data on property investors and where they bought in (2022 vs 2023)

State January – March 2022 January – March 2023 Percentage point change Movement
Australian Capital Territory 4.33% 7.12% 2.79%
New South Wales 22.12% 12.20% -9.91%
Queensland 44.23% 37.97% -6.26%
South Australia 4.57% 3.39% -1.18%
Tasmania 4.81% 1.02% -3.79%
Victoria 10.58% 6.44% -4.14%
Western Australia 9.38% 31.86% 22.49%
House 82.14% 80.65%
Unit 17.86% 19.35%

Source: MCG Quantity Surveyors.

Property investment in WA triples

From Q1 2022 and Q1 2023, property investment in Western Australia shot up from a little over 9% to 32%.

“From what we can determine, WA’s significant jump has come at the expense of New South Wales (NSW) and Queensland.”

Mike Mortlock, MCG Quantity Surveyors

“The proportion of activity in NSW fell by almost 10 ppt between the first quarters of each year. It’s worth noting, however, that every state and territory except the Australian Capital Territory (ACT) has lost a proportion of their investor activity to WA.”

Mortlock remarked that his findings were similar to those of the recently published Property Investment Professionals of Australia (PIPA) 2023 Investor Sentiment Survey.

“A combination of our data and the PIPA results resoundingly demonstrates WA’s dominance in attracting property investors.

“PIPA’s numbers showed that 24.8% of investors sold one or more properties in Melbourne last year, followed closely by Brisbane at 23.3%.

“When it came to desirable investment locations, 25% of respondents picked Perth as their preference – the number one choice among all the capital cities.”

Mortlock listed three key reasons why WA was leading the pack: its politics, population, and affordability.

Investor-friendly government policy

The predominant perception among real estate investors was that WA was much more accommodating compared to other states like Queensland or Victoria.

“It’s obvious from the data and our discussions with clients that Western Australia is considered a far more ‘investor-friendly’ state than either Queensland or Victoria,” said Mortlock.

“Queensland and Victoria have been implementing rigorous tenancy legislation. In addition, talk about limiting or freezing rents has put investors on edge – particularly in Victoria.

“The PIPA survey asked investors to rank each state and territory government from best to worst in terms of positively supporting property investment, and WA came in second behind South Australia for desirability based on government policy.

“Even the threat of legislation can be enough to decimate a rental pool.”

Indeed, not too long ago, PIPA and the Property Investors Council of Australia (PICA) released a statement slamming the Victorian Government based on a rumour that the government was considering rent caps and additional taxes on short-stay accommodation.

“In 2022, Queensland implemented, then ultimately repealed, land tax amendments that would have increased some investors’ tax liabilities by thousands of dollars,” said Mortlock.

“During the 98-day period between implementation and repeal, our client analysis showed Queensland went from attracting 40.9% of all investment transactions among our cohort to 33.6% of transactions – that’s a 7.3 percentage point fall.

“Despite the tax being repealed, the rot had set in. After rescinding the legislation, Queensland only bounced back to 34.7% of all investment transactions.

“In contrast, our analysis shows that WA saw its proportion of Aussie investor transactions double during that period.”

Booming population

Mortlock highlighted ABS statistics, showing that 35,857 people had moved out of NSW and Victoria over the 12 months to the end of March 2023.

Meanwhile, WA’s net migration surged by about 10,000 per year, the second-largest increase in Australia.

“Throw in Australia’s immigration intake which has seen overseas arrivals reach record highs. We expect many will end up settling in WA,” said Mortlock.

Vacancy rates

City Aug 2022 Vacancies Aug 2022 Vacancy Rate Jul 2023 Vacancies Jul 2023 Vacancy Rate Aug 2023 Vacancies Aug 2023 Vacancy Rate
Sydney 10,502 1.5% 11,616 1.6% 10,281 1.4%
Melbourne 9,356 1.8% 6,834 1.3% 6,773 1.3%
Brisbane 2,382 0.7% 3,354 1.0% 3,245 0.9%
Perth 992 0.5%                                                1,062 0.5% 862 0.4%
Adelaide 691 0.4% 1,016 0.6% 839 0.5%
Canberra 633 1.0% 1,250 2.1%                                                       1,168 1.9%
Darwin 215 0.8% 254 1.0% 266 1.0%
Hobart 157 0.6% 498 1.8% 476 1.7%
National 32,948 1.1% 38,864 1.3% 35,425 1.2%

Source: SQM Research, as cited by MCG Quantity Surveyors.

“This influx of new ‘Westerners’ is fuelling demand for accommodation in what is already a tight rental market. The current rental vacancy rate in Perth is just 0.4%, making it the nation’s tightest capital city market.

“The result will be higher rental returns and, in due course, strong capital gains.”

Budget-friendly

Mortlock noted that, despite its popularity, WA property was still relatively affordable for prospective investors.

“CoreLogic’s numbers to the end of August 2023 show Perth’s median house price is the second most affordable of the nation’s eight capital cities. The median house price in Perth is a staggering 45% lower than Sydney’s.

“Relative affordability combined with excellent underlying fundamentals is a magnetic combination when it comes to attracting investor dollars.”

City Month Quarter Annual Total return Median value
Sydney 1.1% 3.8% 1.2% 4.5% 1,098,821
Melbourne 0.5% 1.6% -2.3% 0.9% 768,216
Brisbane 1.5% 4.2% -3.0% 1.4% 5,747,626
Adelaide 1.1% 3.4% 2.2% 6.2% 5,682,642
Perth 0.9% 2.9% 4.5% 9.5% 5,607,083
Hobart -0.1% -0.5% -10.0% -6.0% 5,657,487
Darwin 0.8% 1.6% -1.3% 4.3% 5,496,136
Canberra 0.3% 0.5% -5.9% -2.2% 5,830,875
Combined capitals 1.0% 3.1% -0.1% 3.6% 804,152
Combined regional 0.1% 0.8% -4.0% 0.3% 588,841
National   0.8% 2.5% -1.1% 2.8% 732 886 

Source: CoreLogic, as cited by Quantity Surveyors.



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