New data from the Real Estate Institute of Western Australia is showing a positive improvement in Perth’s rental market. In fact, the June quarter saw Perth’s median weekly rental price increasing for the first time since December 2016.
This comes as the median house price stabilises at $490,000, making Perth property values the most affordable in Australia.
The last quarter saw a 15 per cent decrease in listings for sale, with 14,847 properties listed on reiwa.com. At the same time we have seen a 10 per cent increase in listings for rent, with around 7,000 properties currently available. In spite of this increase in rental supply, data shows it takes on average only 41 days to lease out a home, versus the average 79 days to sell.
These are all strong indicators that the market is continuing to improve.
Investors looking to capitalise on this rental rise should be looking for development potential in sought after, in-fill areas, such as Swanbourne, Melville, West Leederville and Inglewood. These areas are close to the city and are presenting sound rental growth but are still affordable to buy in.
The greatest promise exists in blocks that are suitable for a duplex, triplex or even quad development, as “house behind a house” living becomes more widely accepted, especially if it means people can live closer to the city.
Combine this with the Reserve Bank of Australia slashing interest rates, the Australian Prudential Regulation Authority relaxing their lending restrictions and a stable median house price and investors should feel confident that developing in Perth will provide a good return.
Population growth is another factor that smart investors cannot ignore. In the property cycle, there is always an eventual turning point with supply and demand due to population growth. According to CommSec's latest State of the States report, WA has experienced its strongest annual population growth in nearly four years.
Smart investment comes down to a balance of anticipating future gaps in the market, while also capitalising on current opportunities, and right now the biggest opportunity is with in-fill rentals.
Article written by our Senior Development Consultant, Ewan McConnell.