- Affordability and high rental yields behind investor shift to Perth market
- Concerns of rising costs deterring investors from local Sydney and Melbourne markets
- Future growth predicted due to interstate migration and strengthened economy
Western Australia property investment company Momentum Wealth reports that East Coast based investors are turning to the Perth market for greater investment opportunities.
Momentum cites better affordability, high rental yields and strong possibilities of capital growth as contributing factors.
Affordability main factor in 108% enquiry rise
Compared to the same time last year, a 108% rise was observed at the beginning of the current financial year in enquiries from interstate investors.
General Manager of Momentum Wealth Jennifer Wakeman said concerns persist about increasing prices in Sydney and Melbourne, pushing investors towards the more affordable Perth market.
“Investors looking towards Perth are not only benefiting from more affordable entry into the market, they’re also getting more for their budget in terms of land value, property size and proximity to the CBD – all key drivers of capital and rental growth.”
Jennifer Wakeman, Momentum Wealth
The Real Estate Institute of Australia’s (REIA) latest Housing Affordability Report indicated that Western Australia was the most affordable state, behind the two territories.
On average, Western Australians are only using 26.5% of their family income on loan repayments. Meanwhile, New South Wales and Victorian residents are digging further into their pockets, at 43.9% and 35.6% respectively.
Higher rental yields than East Coast
Alongside affordability, Perth is also outshining the Eastern states in rental yields with a gross yield of 4.4% according to CoreLogic.
The 4.4% gross yield puts Perth high in the rankings, only second to Darwin when compared to all of the nation’s capitals.
Sydney and Melbourne rental yields sat at 2.4% and 2.7% respectively in the latest round of CoreLogic data.
SQM data is in agreeance with CoreLogic, showing that Perth’s rental yields in November for all houses was relatively high at 3.9%.
“There is no doubt the Perth property market is in a sweet spot for investors right now given the opportunity to leverage both yield and growth as the market moves further into its upswing,” Ms Wakeman said.
She added that Perth’s market growth shows no signs of running out of steam, as property volumes reduce and buyer demand is sustained.
Perth market to continue on upward trend
Perth listing volumes are tightening, with REIWA data indicating have halved to 8,513 in October since peaking at 16,969 in November 2015.
The state’s high number of job vacancies, revealed to be at 52,100 by the Australian Bureau of Statistics (ABS), are also putting pressure on reduced housing stocks.
“Strengthening economic indicators, widespread skills shortages and ongoing low levels of stock are all favouring continued market growth.”
Jennifer Wakeman, Momentum Wealth
“Limits on cross-border movement mean it’s currently challenging to recruit interstate, but as borders open up there will be more interstate migration from skilled tradespeople and professional workers to fill roles, which will place further upwards pressure on housing demand and prices.
“Many East Coast investors are recognising this, and are eager to diversify their property portfolios, and get into the Perth market while values are affordable to leverage this capital growth,” Ms Wakeman concluded.