Western Australian investment firm Momentum Wealth found funding for property investors in Western Australia jumped 95% in 2021. That pace is likely to continue, with the city’s unique set of factors making it the one of the best investment opportunities in the capital. there in the coming months.
Their research indicates that 2022 will continue to offer a level of affordability, strong price growth, high rental returns and a robust economic framework for investors.
Property values in the capital have risen 22% since the end of 2019, while average house rents have jumped 15.2% over the past year – one of the biggest national increases.
Jennifer Wakeman, managing director of Momentum Wealth, noted that while While price growth had been strong in 2021, it remained one of the most affordable state capitals in the country.
“The median home value in the city currently stands at $528,551 according to CoreLogic, which is well below the median of $793,658 in 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 that it only takes 26.3% of family income to pay average mortgage payments in Western Australia, compared to 44.7% in New Zealand. South Wales and 37.2% in Victoria. .”
Rental yields, meanwhile, continued to bring good news to investors as the year progressed. Sydney sits at an average of 2.4%, Melbourne at 2.7% and Brisbane at 3.7%, but as Perth’s average rents have increased by 15% in 2021, the city’s yields have averaged 4.4% for investors.
“Over the past 12 months, investors in Perth have seen total gains – capital growth plus rental returns – of 17.9%. This equals the total gains recorded for the Melbourne market. Yet Melbourne has a median property value of $795,108, which means investors are paying an additional $266,000 to enter the market compared to Perth,” Ms Wakeman explained.
While many investors might be skeptical of opportunities in capital markets after last year’s record growth, Ms Wakeman noted that Perth’s outlook was significantly more positive than others.
“As we head into 2022, property values are still below the peak of June 2014, so there is plenty of room for upside growth, and REIWA forecasts further price increases of 10% in 2022,” she noted.
And the 2022 projections for the rental market spell even more good news for investors.
“Rental listings will likely remain below historical averages according to REIWA, but tenant demand will remain high. This will likely see rents continue to rise in 2022,” she said.
“The result is that the Perth market offers exceptional potential for investors, particularly in the current climate of affordable values and historically low interest rates.”