Perth market a recipe for gains in 2022
With Perth’s property values expected to rise a further 10 per cent in 2022, investors have clearly taken note of the city’s potential.
West Australian investment company Momentum Wealth has found that finance to property investors in Western Australia jumped 95 per cent in 2021. That pace will likely continue, with the city’s unique set of factors setting it up to be one of the best capital city investment opportunities out there in the months ahead.
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Their research indicates that 2022 will continue to provide a level of affordability, strong price growth, high rental yields and a robust economic setting for investors.
Property values in the capital city have climbed 22 per cent since late 2019, while average house rents jumped 15.2 per cent over the past year – one of the highest national increases.
Jennifer Wakeman, general manager of Momentum Wealth, noted that while Perth’s price growth had been strong in 2021, it still remained one of the country’s most affordable state capitals.
“The city’s median home value currently lies at $528,551 according to CoreLogic, which is well below the median of $793,658 across Australia’s combined state capitals,” Ms Wakeman noted.
“To put this affordability into perspective, the latest figures from the Real Estate Institute of Australia show it takes just 26.3 per cent of family income to service average mortgage repayments in Western Australia, compared to 44.7 per cent in NSW and 37.2 per cent in Victoria.”
Rental yields, meanwhile, continued to bring good news for investors as the year progressed. Sydney sits at an average of 2.4 per cent, Melbourne at 2.7 per cent and Brisbane at 3.7 per cent, but as Perth’s average rents climbed 15 per cent over 2021, the city’s yields reached an average of 4.4 per cent for investors.
“Over the last 12 months, investors in Perth have notched up total gains – capital growth plus rental yields – of 17.9 per cent. This is equal to the total gains recorded for the Melbourne market. Yet Melbourne has a median property value of $795,108, meaning investors are paying an additional $266,000 to get into the market compared to Perth,” Ms Wakeman explained.
While many investors might be sceptical about the opportunities in capital city markets after last year’s record growth, Ms Wakeman noted Perth’s outlook was significantly more positive than others.
“As we head into 2022, property values are still below the June 2014 peak, so there is plenty of scope for upside growth, and REIWA is predicting further price gains of 10 per cent in 2022,” she noted.
And 2022 projections for the rental market spell even more good news for investors.
“Rental listings are likely to remain below historical averages according to REIWA, yet tenant demand will remain high. This will likely see rents continue to climb higher in 2022,” she said.
“The upshot is that the Perth market offers outstanding potential for investors especially in the current climate of affordable values and historically low interest rates.”