“Great time for investors” in WA

by Rebecca Pike10 Dec 2018

Positive population growth and a decline in vacancy rates, as well as the low interest rates, are making an attractive time to invest in property in Western Australia.

After a 60,000 drop in 2015, West Australian annual population growth is rising again, with repeated climbs in recent years.

CBRE figures show Western Australia enjoyed a 21,000-person net increase alone in the past twelve months.

Population of the Perth and Peel region in 2010 was approximately 1.65 million. That is expected to exceed 2.2 million residents by 2031.

The change has prompted Gemmill Homes Managing Director, Craig Gemmill, to predict good times for the market.

He said, “This is the first step in the recovery of Western Australia.

“It’s really exciting, as there’s two real positives that come out of the population growth.

“Existing housing stock get soaked up. That affects supply and people then go to the next level of pricing or they build. It will really stimulate the market.”

Vacancy rates have seen a considerable drop after topping out at 7.3% in July last year.

Stabilisation has been followed by four consecutive quarterly falls and Real Estate Institute WA figures show the vacancy rate has dipped to 3.9%, a level last seen in 2015.

Gemmill added, “It has happened so quickly. Yesterday we were all saying it was all doom and gloom, but vacancy rates have dropped considerably in just a year.

“When people were leaving the state it became a tenant’s market, due to the number of properties that were available.

“Now, we’re seeing things going back more in favour of the landlord, so it is a great time for investors.

“Investors need at least 5% return. The average now is around 5.5%. When you claim 2% depreciation, that leaves a seven percent return. That’s before investors have even claimed back their borrowing costs.

“So, in this market where interest rates are low, you can get a great return of investment.

“We’re going into an upswing in the cycle and it’s a great time to invest in the market.”

Michael Valetta, CBRE director of residential valuations agreed with the positivity, saying recent data shows clear growth for WA.

He said, “An increase in population growth and decrease in vacancy rates present real opportunities for the real estate market.

“I see great potential in Western Australia and after some lean years, signs point towards the fact we are turning things around.”