Perth’s strong yields, affordability lure property investors

By Gerv Tacadena | 26 Nov 2021

Perth is attracting investors with its strong rental yields and affordability.

Property investors are considering diversifying into Perth’s property market to take advantage of the city’s affordability and robust rental yields.

According to Momentum Wealth’s latest report, there was a 108% increase in interstate enquiries for Perth properties during the first quarter of FY 2022 compared to the previous year.

Momentum Wealth general manager Jennifer Wakeman said many of these property investors are from the Australia’s East Coast who are attracted to Perth’s strong capital growth prospects.

“The uptick in investor enquiry is being driven by the greater affordability of the Perth market amid rising cost concerns in the Sydney and Melbourne markets in particular,” she said.

The Real Estate Institute of Australia (REIA)’s Housing Affordability Report for the June 2021 quarter tagged Western Australia as the most affordable state to purchase property.

The affordability report showed that households only need 26.5% of their income to meet loan repayments, significantly lower than the 43.9% in Sydney and 35.6% in Victoria.

“Investors looking towards Perth are not only benefiting from more affordable entry into the market, they are 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.”

Elevated rental yields, tightening stock

Compared to bigger East Coast property markets, Perth’s gross yield is more solid at 4.4%.

Perth’s rental yield is among the highest across all states, trumping Sydney’s 2.4% and Melbourne’s 2.7%.

“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.

However, it appears the current growth phase in Perth has already shown a little sign of easing.

Still, Ms Wakeman believes that certain factors, including Perth’s widespread skills shortage and ongoing low levels of housing supply, are set to favour continued market uptrend.

Figures from REIWA showed that listings for sale hit 8,513 weekly average in October, almost half of the peak at 16.969 achieved in November 2015.

The 52,100 job vacancies across the state are likely to put further pressure on shrinking housing supply.

“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,” Ms Wakeman said.

“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.”

Rental stock increasing

Latest figures from the Real Estate Institute of Western Australia showed 2,351 properties for rent in Perth over the week ending 19 November.

This represents a 3.7% growth from the preceding week and a 10% uplift from a month ago.

Leasing activity also increased over the same period, up by 2.2% or around 670 properties being rented.

Photo by George Bakos on Unsplash.

Top Suburbs : st kilda west , willliamstown , ropes crossing , sunshine , geelong west

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