While Western Australia spent more time closed off to the rest of the country than anywhere else – a whopping 700 days – the borders are now well and truly open to investors and visitors. Here’s what is driving Perth’s investment potential:
- Mining – home to some of Australia’s wealthiest and most prominent businesses (like Rio Tinto and BHP), the mining industry employs an average of 150,000 on-site personnel each year. Mining is the backbone of West Australian industry, bringing with it not only substantial employment opportunities but technological developments and investment in infrastructure.
- Rich list appeal – as a sought-after place to live, work and invest, Perth is the home to rich listers Melanie Perkins (CEO of Canva) and some serious mining magnates like Gina Rinehart of Hancock Prospecting and Andrew Forrest of Minara Resources. Extreme wealth like these drives aspirations and encourages heavy hitters into the region.
- Strength in the education sector – drawing domestic and international students, Perth provides the perfect base for those attending one of Western Australia’s 125 world-class education and research institutions. This drives dependable and robust demand for rental properties.
- Major infrastructure projects – with several projects currently underway (including Elizabeth Quay, Waterbank, Edith Cowan University, Capital Square Tower and more), lifestyle factors and ease of movement around the city are well-positioned for years to come.
Where are Perth’s investment hot spots?
As Australia’s most affordable capital city to buy a house, with some of the strongest rental yields and many property experts predicting a steady rise in property and rental prices, you’ll need to act quickly! According to Canstar’s Rising Stars Australian Property Market Report, this is where you should be investing:
1. Baldivis – with beautiful parks and an ever-expanding shopping precinct, Baldivis in the City of Rockingham is a family-friendly, fast-growing community. With affordable house prices, sales volumes have doubled in the last 12 months (currently a median house price of just over $400k), rents are rising, and vacancy rates remain low.
2. Orelia – within Kwinana LGA and just over 30 minutes from the Perth CBD, Orelia boasts some of the cheapest housing in the Perth metropolitan area, with a low median house price of around $260k. With plenty of facilities nearby and strong transport links, rents have risen strongly, with yields sitting at about 6%, and house prices have risen 7% in the last quarter.
3. Wellard – slightly more expensive than neighbouring Orelia, Wellard has direct train links to the city, which heighten its appeal. Wellard ticks all the boxes for investors with ultra-low vacancies, rising rents, strong price growth, and sales activity.
4. Gosnells – experiencing double-digit growth in median house prices, property in Gosnell remains affordable at around the $300k mark. Rental vacancies are low, which is pushing up rental prices, pointing to Gosnell as a top investment spot.
5. Butler – located in the far north of Perth within the City of Wanneroo, Butler has recently made its way onto the map thanks to rail link extensions. Over the last 12-18 months, it’s seen a steady uplift in sales.
6. Craigie – with the Joondalup town centre acting as a central hub for Perth’s northern suburbs, Craigie on its western fringe benefits from convenient access to infrastructure and amenities like transport, a local hospital and a university. With sales activity doubling in the last 12 months, prices are rising.
7. Balga – sitting just north of the Perth CBD in the middle ring LGA of Stirling, Balga has been attracting buyers with its proximity to the city and affordable prices. Rental vacancies are well below 1%, making this a secure addition to a rental property portfolio.
What you need to know before you invest
While timing is essential for securing an investment property, doing your background research, and understanding things like local market intricacies and your investment goals are crucial. Here’s what you need to consider before you hit the open home trail:
- Explore equity in your existing home– in short, equity is the difference between the market value of your current home and the balance of your mortgage. If you’re in the fortunate position to have built up equity (by paying down your mortgage, through capital gains, or a bit of both), your lender can advise you how much usable equity you have available to invest. While you’ll need to speak to your lender to get a bank valuation on your property, your local First National Real Estate office can provide an indicative market valuation to get the ball rolling.
- Identify your goals and stick with them –while it can be easy to get swept up in the appeal of a potentially lucrative do-up or a home you might like to live in for retirement, keep your end goal in mind. With investment properties, ongoing maintenance, tenant demand, and potential for capital gains need to be considered. Your local First National Real Estate office can provide you with current market rental information to help inform your investment decision.
- Understand the local legal intricacies of sale and purchase– if you’ve purchased a property before, you might think you’re familiar with the process from a legal perspective. However, different states have different intricacies that you need to be aware of. Things like due diligence, vendor statements, and the type of sale (i.e., private treaty versus auction) can all differ, so it pays to get a property professional involved and make sure you’re well versed.
- Understand your obligations as a landlord– if you’re looking to rent your investment property out, you’ll need to be across your rights and responsibilities. This includes things like minimum ventilation, lighting and plumbing and drainage requirements. The Government of Western Australia Renting out your property guide covers everything you need to know.
If it’s your first time investing, this Guide for First Time Investors is packed with plenty of practical tips, and First National Real Estate is always on hand to share our local knowledge and expertise. And if you’re considering a rental investment, our property managers are a wealth of information regarding potential rental returns.