- Housing finance up from $2.9B to $5.6B according to the ABS
- Perth property prices have increased by over 22% since pre-pandemic levels
- Fast growing WA economy expected to bolster prices too
Factors such as affordability, strong price growth, high rental yields and a strong economy has helped to drive strong property investment activity in WA, says Momentum Wealth.
Figures from the Australian Bureau of Statistics (ABS) show that housing finance to investors in WA totalled $5.618bn for the 12 months ending October 2021, up from $2.883 billion during the preceding 12 months.
This represents a staggering 95% increase.
Since November 2019, Perth property values have increased by over 22% according to CoreLogic.
However, Perth’s city median home value is currently $528,551, well below the combined state capitals median of $793,658, highlighting the relative level of affordability.
Jennifer Wakeman, Momentum Wealth General Manager, added that it takes 26.3% of family income to service the average mortgage repayment in WA, compared to 37.2% in Victoria and 44.7% in New South Wales, according to the REIA
“While these value gains are seeing many property owners benefit from an uplift in equity, Perth also remains one of Australia’s most affordable state capitals, which is placing investors in a strong position to now expand their portfolio.”
Jennifer Wakeman, Momentum Wealth
Rents are on the rise too
As rental stock tightens, rental prices are on the rise.
SQM Research data shows that rents for Perth houses are up by 15.2%.
Rental yields have increased to 4.4% – higher than the yields in Sydney (2.4%), Melbourne (2.7%) and Brisbane (3.7%).
“Over the last 12 months, investors in Perth have notched up total gains – capital growth plus rental yields, of 17.9%,” explained Ms Wakeman.
“This is equal to the total gains recorded for the Melbourne market.
“Yet Melbourne has a median property value of $795,108, meaning investors are paying an additional $266,000 to get into the market compared to Perth.”
Stronger economic growth expected for WA
Thanks to the resources boom, the WA state economy is expected to grow in value by 10% this year, following 4.3% growth in 2020-21. This is the strongest level of growth among the states for the second consecutive year.
Currently, WA has the lowest unemployment rate (3.8%) of the states and had the second-highest level of net interstate migration nationally, behind Queensland.
“The Perth property market offers exceptional opportunities for investors,” added Ms Wakeman.
“As we head into 2022, property values are still below the June 2014 peak, so there is plenty of scope for upside growth, and REIWA is predicting further price gains of 10% in 2022.”
REIWA predicts rental listings will remain below the historical average while tenant demand will remain high.
“This will likely see rents continue to climb higher in 2022.”
“The upshot is that the Perth market offers outstanding potential for investors especially in the current climate of affordable values and historically low interest rates,” concluded Ms Wakeman.