10 Reasons to Invest in Perth Western Australia - Satterley
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10 Reasons to Invest in Perth Western Australia
Property prices in Sydney and Melbourne have made crazy gains in the past few years, making it more and more difficult to get into the market. If you’re tired of showing up at auctions only to see bids quickly pass your reserve, and you’re starting to think you’ll never own a home, then perhaps it’s time to think outside the square – or outside of the state to be specific. Why not consider the capital city of Western Australia, the picture-perfect Perth? Here are 10 good reasons why investing in Perth makes great sense.
1 ‘Rentvesting’ gets you a foot
on the property ladder
We’re not suggesting you live in Perth (although of course
it is an awesome place to live). But this is simply not
possible if you work in the eastern states and your family
and friends are there. However, more and more Australians
are discovering ‘rentvesting’. This is a concept where you
buy property in a more affordable area to rent out, and
you continue renting in a different location where you
prefer to live due to work and family ties.
Over time, you will increase your equity in the
rental property as it grows in value, which could
fund a deposit for a property in your home
state. Or you can always continue to ‘rentvest’.
With all the tools available on the internet, it’s very easy
to find properties and check them out remotely. If you
choose, you can take a trip over to WA to check out
prospective purchases before you buy. Then, once you are
the proud new owner of Perth property, you will need to
engage the services of a top quality property manager to
find the best tenants, manage the tenancy and make sure
the property is looked after. All of this can be done online
or on the phone too.
You’ll find that buying property in Perth may be very
different from trying to buy in Sydney or Melbourne.
Rather than finding property that is selling at way above
the advertised ‘asking’ price, in Perth you’ll often find the
opposite. You could snap up property under the asking
price. Last year, Perth property was selling at up to 7%
under its listed price.
‘Rentvesting’ – an answer to the
property puzzle.
2 Perth houses are more affordable
Australia’s house prices are amongst It’s not just the price tag, it’s the
the most expensive in the world. In total cost of entering the market. It’s
fact, housing affordability is a major a simple but discouraging equation:
headache for state and federal
Higher house values =
governments. And, property values
• larger deposits
in east coast capitals continue to rise.
• more stamp duty
You can see in the table that the • the risk of lower rental yields
median house price in Sydney is
But what if you were savvy enough
now $850,000, and Melbourne
to buy into a cheaper market, where
and Canberra’s are catching up
capital growth was promising and
fast. These median prices are from
rents provided a positive cash flow?
December 2016, and in 2017 they
(No, we’re not dreaming!)
are continuing to rise.
This is great if you’ve been lucky With a median house value
enough to snap up a bargain in of $480k, Perth is one of the
these cities before they became most affordable cities
largely unaffordable, but for so many
people it means the dream of home
in Australia.
ownership is slipping further away. As economic conditions in the
region start to improve following the
softening of the mining boom, and
with moderate growth predicted
in 2017, could Western Australia’s
cosmopolitan capital be Australia’s
best buying opportunity market?
Annual Median
Increase
Sydney 16% $850,000
Melbourne 12% $640,000
Canberra 6.7% $601,000
Brisbane 4.4% $490,000
Perth -3.2% $480,000
Lower property prices =
smaller deposit, less stamp
duty and higher returns.
3 House prices look set to rise
What does it mean when house prices flatten out after a
downturn in the market? One word: opportunity! There’s
no doubt the boom-times of the property market in Perth
and mining towns in Western Australia are over – and that’s
a good thing. When returns seem too good to be true,
that’s exactly what they are. Sure enough, there has been a
correction in prices, which has brought values down to more
reasonable levels.
A common way to look at property values is on
the property clock.
Sellers’ Market
Higher Tighter
Demand Finance
Upswing Downswing
Improved Lower
Finance Demand
Buyers’ Market
With two consecutive quarters of moderate growth, and You may not see the stellar growth in the Perth market
the third-highest increase in property prices of all Australian that we did at the height of the mining boom, but you
capitals in December 2016, all indications are that Perth is can reasonably expect a slow, steady trajectory.
sitting pretty at six o’clock. Most importantly, however, if
This is good news for smart investors – who doesn’t love
you take another look at the clock, you’ll notice that from
an opportunity that offers less risk and greater stability?
here the only way is up.
Slow and steady
wins the race.
4 Strengthening rental yields
At the height of Australia’s mining boom, rental
properties were in high demand. Workers were
relocating to Perth from around the country and
overseas. Earning high wages, they were willing to pay
high rents.
But September 2016 data from the Real Estate Institute
of WA suggests that the subsequent decrease in
median rent price has lured a new generation of renters
out of the family home and into their first tenancies.
These more favourable tenant conditions have seen
leasing activity in Perth steadily climb – we’re talking an
increase of 23.8% over the prior year!
Some pockets in the city’s northwest and southwest
have not only recorded more new leases being taken
out, but also increases in median rents. Perth landlords
are able to rent their properties out almost a week
more quickly than they could a year ago.
If Perth’s greater house affordability and decreasing
vacancy rates haven’t caught your attention, then
perhaps the West Australian capital’s gross rental yield
will make you sit up and take notice. Because it’s higher
than those of either Sydney or Melbourne.
In fact, at 3.6% Perth’s median yield is 0.5%
higher than all other capital cities combined.
Remember how we mentioned the potential for
positive cash flow from property investing earlier?
A new lease on life for rentals
and an impressive rental yield.
5 Perth’s economy is
set to turn the corner
No-one has a crystal ball, but there are reports that the
Western Australian economy is set to grow at a modest pace,
driven by the export sector. While the mining and resource
industries are still important to the WA economy, other sectors
such as tourism and healthcare – with an aging population –
are set to expand.
Unemployment rates are already evening out and
with interest rates still at historic lows, buyers are
returning to the property market.
This can be seen in the decrease in the average time that
houses for sale stay on the market. In a depressed market,
it takes much longer to sell a property. When things are
looking up, sellers can sell up and move on far more quickly.
Population growth is an important indicator of a
strong economy.
According to ID – the population experts, the population of
Greater Perth is projected to increase from
1.83 million in 2011 to 2.35 million in 2021. This increase
represents 82%. More people means a greater demand for
property, which is what investors look for.
Commentators are starting to
believe that Perth’s property
market has hit bottom – the only
way now is up!
6 Perth is still a base for
FIFO workers
You are probably familiar with the This eclipsed the previous record
acronym, FIFO. It stands for ‘fly-in, of $12.4 billion set in 2013, at a
fly-out’, and it refers to workers who time when resource prices were
travel to remote areas to work in the much higher.
mining and resources industries.
Although commodity prices have
They often work for a solid three fallen dramatically since the height of
or four weeks and then have an the boom, Bob Gregory says it’s not
extended leave time back home yet over.
with their families. Perth is a popular
“If you think of the boom in terms of
base for FIFO workers, who have
increased exports of minerals, that
often relocated from eastern states.
was very, very late getting started,”
This makes trips out to their working
he says. “That’s only been going
location shorter and well, also, Perth
really seriously for maybe three-
is a great place to live.
quarters of a decade, and that’s
Rental demand from FIFO workers going to get stronger”.
contributes to a strong rental
market. So how does it look for
FIFO workers?
Perth still supports
The ‘boom’ time may be behind
Perth, but it’s definitely not in the
an active resources
‘gloom’ time. and mining
According to The Australian industry.
newspaper, just when you
thought the resources boom
was behind us, Australian
mining companies delivered
their best year ever in 2016,
exporting $13.4 billion worth
of resources.
7 Perth’s a great place to live!
Perth is often described as a big, friendly country town. Even though you may be buying property in Perth as
Large enough to attract sporting, arts and cultural events an investment and you won’t be enjoying the awesome
that other state capitals enjoy, there’s no doubt that the lifestyle yourself, you’ll be offering potential tenants all
pace of life is more relaxed. You only have to look at their of these delights. Perth was voted the world’s 7th most
peak hour traffic to notice a welcome difference. livable city in 2016.
The climate is warm, with mild winters and the extreme Premier and Tourism Minister Colin Barnett said at
summer heat is pleasantly cooled down most days by the the time: “Perth is a vibrant city with clear skies, fresh
‘Fremantle’ doctor – the name locals give to the cooling air and beautiful beaches, where people can still enjoy
afternoon sea breezes. the benefits of a modern, sophisticated city and a
relaxed lifestyle.
The beaches are stunning, attracting boaties
“When you look around the world where else would you
and surfers from around the globe. get the kind of health care and education standards that
If water sports are not your thing, then Perth has more are delivered in WA?”
than its fair share of parks and gardens – tourist flock from
Good point!
around the globe
There’s something for everyone
in Perth!8 Greater global access with
non-stop flights to Europe
An added attraction to Perth is that it’s set to
become an even more important gateway for
global travellers.
From 2018, Qantas is introducing
direct flights from Perth to London on
its new 787-9 Dreamliner.
No more arduous plane changes in South East
Asia or the Middle East. Imagine not having
to negotiate busy international airports when
you’re in transit. Very soon passengers will
be able get on board in Perth and arrive in
London without leaving their seats.
Qantas confirmed these plans in December
2016, giving a fillip to Perth’s tourism industry
and the potential for further new jobs in
construction too. This is because Qantas, the
West Australian government and Perth Airport
will contribute to an upgrade of the airport to
facilitate the new route.
Of course, these direct flights will return
to Perth with tourists eager to sample the
delights Perth has to offer. Perth will become
the gateway to Australia.More jobs and more tourists – great things to look forward to.
9 Less high density development
than in the eastern capital cities
The apartment glut that the media has been
warning about is mainly an east coast affliction.
There has just not been the same level of high
density over-development in Perth that is being
seen in Sydney, Melbourne and Brisbane, where
there are warnings about oversupply and possible
corrections in the apartment market.
One reason could be that Perth residents prefer
the detached family home, on a reasonably sized
block with three to four bedrooms.
In a study conducted by the Grattan
Institute, it was found that 44% of Perth
residents expressed a preference for
three to four bedroom homes.
79% preferred to live in a separate dwelling.
The difference between Perth and Sydney and
Melbourne is that you don’t have to live too far
out of the city to find affordable family homes.
Get more bang for your
buck with larger homes at an
affordable price.10 Perth’s not Sydney or Melbourne
Just in case you’re still not system, which can make you spend
convinced that Perth is a good more than you can afford under in the
place to buy property, we’re stressful auction setting. Instead you
making it very clear in this final can take your time making your offer.
reason – which is that it’s different.
You don’t have to travel way out of
Perth is a more relaxed, the city to find affordable property –
like you do in Sydney or Melbourne.
slower-paced and less And you don’t have to accept poor
competitive property market quality property, just because that’s
than those that you find in the all you can afford.
eastern states. Oh, and the weather’s better too!
Perth is the sunniest capital in
There’s not the ‘buyer frenzy’ that
Australia with an average of eight
drives prices up to unrealistic levels
hours sunshine a day.
in short periods of time. There are
not so many buyers vying for the
same piece of real estate.
Property is usually sold via private
The future’s brighter
sale – not the hyped up auction in Perth!Sales and
Information Office
4 Barakee Road (off Honeywood Avenue),
Wandi, Western Australia
Monday & Tuesday: By appointment
Wednesday: 1pm - 5pm
Saturday & Sunday: 1pm - 5pm
For more information contact 08 9368 9079
or honeywood@satterley.com.au
Rowley Road
Honeywood
Avenue Sales and
Information
Kwinan
Centre
4 Barakee Road,
Wandi
Lyon Ro
a Free
ad
way
Anketell Road
Disclaimer: The information contained in this document
is in good faith; however neither Satterley nor any of
its directors, agents or employees give any warranty of
accuracy nor accepts any liability as result of a reliance
upon the information, advice, statement or opinion
contained in this document. This disclaimer is subject
to any contrary legislative provisions. © Satterley 2017.
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