A noticeable shift has occurred in Perth’s property market over the last 12 months, one that is likely to continue for some time, according to Damian Collins of Momentum Wealth.
Collins explains that during the last eight or nine months, rental vacancies in the WA capital have dropped to extremely low levels of around 1.9% – considerably tight for a city area as a whole. This has been coupled with strong rental growth last year and a stream of interest rate cuts.
“Tenants are thinking, ‘I can get a loan and buy a home, and it’ll cost me the same as renting’, so a lot of people are moving out of the rental market and into home ownership,” Collins says.
A spike in first homebuyer activity is translating to increased buying activity in the $400,000 to $500,000 price range, and even up to $600,000, to the point that there is a shortage of residential stock in this price range.
“A balanced market is considered to be 12,000 to 13,000 properties [on the market], but we’ve been at 8,000 listings,” Collins says. “The sale market has been strong and there is a shortage of stock, so we’re expecting the market will perform well. It’s moved already, but we’re predicting 6-7% growth in 2014.”
Backing up Collins’ positive predictions for Perth is a new RP Data report detailing almost 800 locations nationwide where rental returns are forecast to double in value in the next decade. Of these suburbs, each selected based on their past performance, 181 are in Western Australia.
“From an investor’s perspective, these are the ones that have done very well in the last five years,” confirms the report’s co-author Cameron Kusher, adding that each location on the list has experienced “consistent rental growth of at least 7.2%.”