‘Worst cycle ever seen’: Is it still worthwhile to invest in Perth properties?

He said: “We’re not going to see it run away, but we’re at the bottom of a decently lengthy long bottom of the cycle. The vacancy rate is still high … pushing high 6 per cent.”

“Our rents have come off 25 per cent and that’s brutal. I’m a property investor myself, so it’s been a little bit painful,” the property professional added.

Moreover, the government policies have also become quite a hindrance when it stated that all the benefits for first home buyers in established properties are to be taken away and be given to builders.

Damian said: “What really caused the downturn over 2015, 2016, and into early 2017 … [is] just a general lack of confidence. People were worried about their jobs. We’re not seeing $50 billion projects anymore.”

The prices of Perth properties are currently at an all-time low—the lowest, in fact, against Sydney and Melbourne since 2003.

Stimulating growth

Despite the bad state of the property markets, Perth is supposedly going into “recovery mode” as the year goes by.

The agricultural sector is expected to foster growth in Western Australia, from Perth to Esperance.

According to Damian: “When you go below Perth and all the way down … to Esperance, it’s the size of England. In fact, larger, and that’s all agricultural … We’ve got a huge wheat exporting market.”

Tourism and education also have a great potential of bringing the life back to Perth property markets.

“[They just] need to work on [tourism and education]. We don’t get as many foreign students as Sydney and Melbourne, but we certainly are well supported by ... Singapore and Malaysia [because] … they’re quite culturally aligned,” the property professional explained.

Should you invest in Perth now?

While there will not be any significant short-term growth anytime soon, property investors can take advantage of the infrastructure play and rezoning that is happening in Perth.

Damian said: “They’re looking at Perth and it’s sprawled out 60 kilometres north, and 60 kilometres south. It very much hugs the coast, goes a bit inland on the eastern part.”

“The government’s looking at that going well. We’re 2 million people now, we’re going to grow to four, four-and-a-half [million], over the next 30-plus years … [and] we just can’t keep sprawling forever, so they’re really starting to put a big focus on rezoning,” he added.

A long-term outlook is one of the most important things to have when investing in Perth property markets nowadays.

Being a capital city, Perth will obviously recover and then, most likely, go through another brutal cycle over time—it’s only a matter of being able to sustain your portfolio through these unpredictable ups and downs. According to Damian, Perth was once ridiculously cheap until it experienced its own boom when the value of properties shot up to nearly twofold over a four-year period.

Then, it had “10 years of flat”, much like Sydney had its seven- to eight-year flat period.

He said: “As long as you’ve got a longer-term outlook, you know, [investing in Perth is] perfectly fine … If you’re amassing a larger portfolio, you’d want properties in your major four capital cities—Sydney, Melbourne, Brisbane, [and] Perth.”

“After that, you might start looking at spec areas. If you’re going to have a decent-sized portfolio, Perth certainly would be a part of that if you’re going to look to invest and take advantage of what’s going on,” the property professional concluded.