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Why it’s a great time to buy in the Perth property market
Record high mining sector employment levels and low residential vacancy rates are driving increasing interest in the Perth property market, so for investors with a strategic counter-cyclical investment approach, these signs suggest it’s a great time to buy in the Western Australian capital.
Declining vacancy rates
Perth’s vacancy rate of 4.2 per cent at the end of September 2018 represents a significant reduction over the past three years, and rents are remaining steady while other capital cities have recorded a decline.
With sales figures historically following the lead of the rental market, there’s every reason to have improved confidence in the Perth market, particularly as we head into spring and summer.
The Real Estate Institute of WA (REIWA) recently noted that Perth’s vacancy rate is at its lowest since early 2015, with leasing activity rising significantly in recent months.
REIWA’s president, Hayden Groves, said that this indicates that confidence and stability is returning to the market.
“Steady rents, easing supply as listings for rent continue to fall and stronger demand with more leasing activity all point to the rental market leading Perth’s property market recovery,” he said.
Affordability and ideal timing
With both the Sydney and Melbourne property markets retaining high prices but starting to soften, Perth currently offers opportunities at the opposite end of the investment cycle – affordable stock coupled with indicators of market recovery.
The Perth market is also looking good for owner occupiers including first time buyers. Locally, household income is growing at a faster pace than the median dwelling price, resulting in improved housing affordability.
CoreLogic’s Housing Affordability Report found that saving for a deposit in Western Australia takes only an average of 7.8 years, which is significantly lower than Sydney’s 9.1 years, Melbourne’s 10.8 years and Brisbane’s 8 years.
Mining sector drives improving economy and high job vacancies
In general, prospects for the Western Australian economy are positive, with investment in new projects including lithium production and sale – as well as increasing minerals exploration – driving growth in local job vacancy levels. By the end of year, it is predicted that Western Australia will produce half the world’s supply of lithium.
The local economy has moved from investment-led growth to export-led growth over recent years, with major resource projects requiring significant investment to sustain their operations, creating significant opportunities for mining services, manufacturing and transport industries.
The latest data from the Australian Bureau of Statistics shows local job vacancies at 27,600 in August, up from 24,100 in May.
Chamber of Commerce and Industry of WA chief economist Rick Newnham said that WA’s jobs boost is being spurred on by the mining, resources and energy sector, reflecting an increased demand for skilled workers.
Historically, a rise in job vacancies in skilled roles results in an influx of workers from interstate and overseas, increasing the demand for rental accommodation.
All the more reason for Perth to be firmly in the spotlight as the place to buy before prices rise.
Meanwhile, recent ABS figures show that Western Australia’s average annual full time total earnings rose 1.4 per cent in the last financial year, and are 10 per cent above the Australian average for the same period.