In 2023, Australia ushered in a big increase in migration, with former senior immigration officials expecting Australia's annual net migration population to reach 300,000. In addition, the international student population has also ushered in a big growth, especially in February 2023 (with the new Chinese mainland policy seeing tens of thousands of international students returned to Macau). Under the combination of multiple factors, Australia's rental market has shown unprecedented prosperity.
It is said that Australia's major cities have fallen into a rental famine. It is generally believed that Melbourne and Sydney are the most difficult cities to rent in because they have always been Australia's largest population-wise and they see the most frequent housing transactions of the international metropolis. But what I never expected is that the hottest city in the entire Australian rental market is actually - Perth.
According to SQM Research, Perth's home vacancy rate has fallen to an all-time low of 0.4% in January 2023.
In 2023, Australia ushered in a big increase in migration, with former senior immigration officials expecting Australia's annual net migration population to reach 300,000. In addition, the international student population has also ushered in a big growth, especially in February 2023 (with the new Chinese mainland policy seeing tens of thousands of international students returned to Macau). Under the combination of multiple factors, Australia's rental market has shown unprecedented prosperity.
It is said that Australia's major cities have fallen into a rental famine. It is generally believed that Melbourne and Sydney are the most difficult cities to rent in because they have always been Australia's largest population-wise and they see the most frequent housing transactions of the international metropolis. But what I never expected is that the hottest city in the entire Australian rental market is actually - Perth.
According to SQM Research, Perth's home vacancy rate has fallen to an all-time low of 0.4% in January 2023.
Over the past year, while the Australian property market has generally come under a lot of pressure, Perth has become Australia's best-performing capital city thanks to strong economic momentum and population growth. Foreigners buying property in Perth, Australia, has also become the first choice for overseas people.
It can be said that in this round of adjustment cycle for Australian house prices, Perth not only withstood the pressure of repeated interest rate hikes and maintained a steady rise in house prices, but it also unexpectedly reaped the highest rent increase in Australia!
So what exactly are the advantages of buying property in Perth? Is it still a good time to buy a property in Perth, Australia?
First, the economy is developing strongly
Since May 2022, the RBA has raised interest rates nine times in a row. Although rising interest rates have triggered predictions of a 10 to 20% decline in property prices across Australia, many areas have not been greatly affected, with some even bucking the market and house prices have risen. This is the case in Perth, where Australia's house price correction has bucked the trend with a small but significant growth trend.
Economic indicators are an important factor in measuring whether an area is worth investing in. It's the same with foreigners buying property in Perth, Australia.
Perth's economy is driven by a number of industries and factors, the most important of which are mining and the extraction of natural resources, (particularly iron ore and natural gas). In addition, Perth has a number of other important industries - such as agriculture, fishing, manufacturing, tourism and technology - which have boosted investors' confidence in buying property in Perth.
Perth is also one of Australia's education hubs, attracting a large number of international students to study. At the beginning of 2023, many international students chose to buy a house in Perth outright because of the difficulty of renting a house there coupled with the high rent. This has further pushed up property prices in Perth.
The reason why I emphasize the importance of economic development for a city is because of the close relationship between economic stability and tenants. During boom times, people are generally more likely to tolerate high rents and rising rents because their incomes are relatively high. In times of economic downturn, tenants often cannot afford high and rising rents because their income may suffer. Perth's per capita income is currently the first in Australia, and the burden of renting and buying property is also small.
In addition, economic stability also affects the employment and financial situation of tenants. If the economy is unstable, businesses may lay off employees or reduce hiring, resulting in job losses or reduced income for tenants. This will make it impossible for tenants to pay rent, putting financial pressure on landlords.
Therefore, maintaining economic stability is very important for both tenants and landlords, as it can provide employment and stable income for tenants, and stable rental income for landlords. In Perth's economically stable environment, tenants can pay rent more easily, landlords can more easily maintain properties and investors can make more money by buying a property.
In general, Perth's economic power sources are very diverse, which helps to improve the city's economic resilience, and the risk after investing in Perth is relatively small.
Second, the vacancy rate is low and rents are soaring
According to statistics from February 2023, rent in Perth has risen by 17.9% over the past 12 months and will continue to rise as competition from rental mayors intensifies.
The affordability of the Perth market, combined with strong rental yields, now makes it particularly attractive to the investor market.
According to the Australian Bureau of Statistics, the average salary in Perth is $1,937 per week. This is one of the highest for cities in Australia. High incomes make property prices in Perth relatively more affordable.
Third, housing prices are low and affordable
Due to the rapid rise in rent, which has put great pressure on renters, more and more people are choosing to buy property in Perth, Australia, and take out their own mortgages rather than handing over a similar amount of money to the landlord every month.
In fact, house prices in Perth are much lower than in other capital cities, especially Melbourne and Sydney. According to SQM Researchstatisticsfrom February 2023, the entry threshold for a Sydneyhouseis very high (reaching1.07million Australian dollars). A house in Perth costs on average$813,000 - half as much. The entry threshold for a Sydneyapartmentis $740,000, whilst a Perthapartmentcostsjust $420,000.
A big advantage of having a low entry threshold is that if you only have enough money to buy one property in a more expensive city, a low entry threshold elsewhere means that you can buy two properties, or even three. Plus, your rental income will increase a lot every week.
I know a lot of savvy investors who will abandon a city like Sydney with a high price of property and instead buy 2 or 3 properties in Perth for a higher return, as well as lock in more room for home appreciation.
All in all, Perth is a fast-growing city with a rapidly growing population, a lot of government investment, and a favor for overseas investors, all of which make Perth's property market a potential investment opportunity. Of course, there are risks associated with any investment, and investors need to make decisions on buying property in Perth based on a full understanding of market conditions.
You can also watch the video below to learn more about buying property in Perth:
Alison’s Story
生於香港，移居澳洲，一生與房產結緣。 隨著飛機緩緩降落墨爾本機場的跑道上，我的人生和事業也隨即換上了另一條跑道，由一名香港地產代理搖身變成澳洲地產銷售顧問，並成功考獲澳洲律師資格，放下了港人對投資買樓的思維，換上了澳洲人的房產投資視角。
在律師樓工作的日子，身邊都是擁有高學歷的專業人士，即使工資水平甚高，是社會上精英，然而他們的生活卻是終日營營役役，手停口停，難以買樓致富。
我不想他朝一日失去工作能令家庭承受巨大壓力，我花盡時間及努力鑽研財務及房產投資知識，希望盡早實現財務自由，同時讓艱苦工作多年的父母過好日子。
透過這個頻道，我會跟大家分享投資澳洲房產的知識及經驗，一起踏上財務自由之路。
Alison老師成立 investwithalison.com 這個網站的初衷是希望透過這個平台提供中立的澳洲房產資訊，協助投資者建立最合適的投資策略。
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