Perth: The Hidden Hotspot for Property Investors

With so much attention focused on the blue chip cities of Sydney, Melbourne and Brisbane, investors are missing one city we’ve identified as one of the best opportunities in the country. 

We’ve been tracking Perth for a while now.

And it’s quickly emerging as a huge opportunity for investors looking for high capital growth, high cash flow and at a lower entry point. 

In fact, of all the Australian capital cities, Perth’s median house price growth was the highest of all in the last 12 months. 

It outperformed Sydney, Melbourne, Brisbane and even Adelaide. 

In the last 12 months, Perth house prices shot up an astonishing 10.6%, compared to 5.4%, 0.3% and 2.1% for Sydney, Melbourne and Brisbane respectively.

And while 10.6% growth would command attention at the best of times, it did it during a rising interest rate cycle. 

Even more significant for investors is that the stock on the market during this time plummeted 20.8%. 

That’s a statistic which should make you sit up and take notice. It’s a sign of chronic undersupply. 

In fact, the number of REIWA listings on the market has fallen to 4,931 which is 40% less than a year ago.

Furthermore, it should be noted that Perth has shown resilience, standing as one of the only two states that have stayed on positive annual growths despite increasing cash rate.

That’s significant. 

So why has Perth quietly soared past every other major capital city to be the biggest story of 2023?

As always, there are several factors. 

The main ones are:

1. Increased economic activity. 

Strong export demand has driven Western Australia’s economic recovery. Exports to China have bounced back, and while mining happens in remote areas, many miners have head offices in the city. 

In the 12 months to March, the economy of Western Australia has grown more rapidly than any other state. The population grew  by 2.8%, highest among all the states.

It is also the only state which is entirely designated for visa subclass 491 (skilled work migrants). 

And the unemployment rate of 3.4% is far lower than the national average of 3.6%.

2. Rental growth has gone through the roof. It has surged 13.2% in the last 12 months, and is beginning to attract more investors to the city. It also has the second highest rental yield of any capital city except Darwin.

3. Perth is very affordable with dwelling values currently 23% below the combined capital cities.

As per Corelogic data, median dwelling value in Perth for October 2023  ($631,195) stood way lower than Sydney ($1,121,196), Melbourne ($778,541), Brisbane ($770,575), and Adelaide ($700,024).  

Why does this matter?

Partly because people want more bang for their buck, so an affordable capital city is very appealing. And Perth is a great city to live in. 

More importantly from an investment point of view, it shows that people can still afford to pay more for houses in Perth. 

In fact, figures collated by online job search company Talent.com indicate that Perth workers enjoy the highest salaries of any capital city in the country. 

And this means we have big salaries, cheap houses and not much stock on the market. 

If there was ever a recipe for a sudden price burst, this is it.