Property listings in Perth are at record low numbers, but prices have remained high into July 2023.
Data from SQM Research has revealed that property listing numbers in Perth are at the lowest they've been in 13 years, despite the city being the only Australian capital to see property prices consistently higher over the last year.
We've all heard of the renewed FOMO out West. One reason for the renewed buying vigour, many real estate experts agree on, is that demand remains high and there are simply fewer properties being put up for sale.
"It's probable that low to midrange property prices will continue to rise in the next 12 months due to strong demand and limited supply," said Jamie Peles, sales consultant, One Agency North.
Which parts of the metro region investors decide to purchase residences can greatly affect resale value, as well as rental returns further down the line.
"Proximity to the coast, freeway, rail, and infrastructure is crucial to the capital growth of a suburb," said buyer's agent for Resolve Property Solutions, Peter Gavalas. "Adding to that good school catchments and major hospitals also provide a springboard for future growth."
Affordable suburbs with short commutes to the CBD display potential
Buyer's agent Kate Hill from Adviseable singled out a few areas of Perth that she says investors will be smart to take notice of.
Properties in affordable areas are becoming increasingly accessible thanks to infrastructure projects and a few suburbs stand out:
- The City of Stirling has many strings to its economic and property bows with its proximity to the city being just one of them. - Kate Hill, property buyer, Adviseable Buyers Agency.
Hill identified the northern City of Wanneroo, with its national park, lakeside real estate, and a comparatively short commute to the CBD as being one area where affordable property made a good case for investment.
Infrastructure projects a deciding factor in Perth suburb property prices
Federal government infrastructure projects in the pipeline for postcodes in the southeastern transport corridor of the city mean investors in the west need not focus solely on Perth's northern or southwestern suburbs.
Galavas said that while his preference is investments along the coastal corridor, suburbs further inland also represent solid options.
"In some cases, due to budget, strategy, and property type, investing east of Perth may also be logical as we get priced out of suburbs in Perth's north and south." - Peter Gavalas, buyers agent, Resolve Property Solutions.
Perth's best-performing suburbs in 2023
A mix of lifestyle benefits and healthy rental returns seem to have been big factors in Perth's real estate value growth in 2023.
Southern enclave, Winthrop, briefly saw median values climb above $1 million as of June 2023 and 3-bedroom residences in the suburb have increased in value by 17.9% over the last year.
Proximity to two of Perth's biggest universities gave the average rental property there a 4.4% yield as of July, and vacancy rates sit at a manageable 1.8%.
At the more affordable end of the market, leafy Middle Swan has displayed good returns on investment.
Two bedroom unit rental yields in the up-and-coming area are 7.6% as of July after peaking at 8% in the previous month.
Asking prices for 2-bed units in Middle Swan are around $100,000 lower than the Perth average of $445,000, and the average asking price for all houses in the coveted area has experienced a steady climb over the last 3 years.
High Perth property prices in 2022 mean steeper 2023 declines
When it comes to depreciation, one area of Perth that rode the FOMO wave of 2021-22 has seen values decline considerably.
This could be somewhat expected considering how high prices climbed in the era of weekend home opens resembling open house parties for middle-aged investors.
"In the current market of extremely low levels of properties for sale and the increased level of competition, we can, as investors, sometimes make bad decisions and buy the wrong property or pay too much due to FOMO." - Peter Gavalas, buyers agent, Resolve Property Solutions.
The hip central precinct of West Leederville attracted a multitude of buyers in 2022 and even well into 2023, with average asking prices topping $1.16 million as recently as March this year.
This figure has since fallen to just over $700,000.
Will Perth property prices continue to rise?
Overall, properties in Perth have performed well in recent times. The city represents the only capital city in Australia where prices have remained steady or slightly increased in the year to date.
"No other capital city can provide the same levels of returns, affordability, and strong growth prospects. For an Eastern states' investor, to be able to buy a house on a green title block for sub $500,000 is great value." - Peter Gavalas, buyers agent, Resolve Property Solutions.
Lower stock numbers may yet prove to be the canary in the coal mine, however, and the latter stages of 2023 will be a test of nerve for many homeowners in the West.
They will be undoubtedly listening out for indications that markets elsewhere in the country might recover soon, increasing the chances that even more Eastern states investors will start to look west.