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Why Perth still has room to grow

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But a closer look at the data tells a different story: Perth still has significant untapped growth potential. The key for investors is how to find it.

Market Cycle

The housing market was strong last year, but it wasn’t always so good: Perth experienced a downturn between the June 2015 and June 2020 quarters, with the median house price falling 11.5%, according to the Australian Bureau of Statistics.

In the mid to late 2010s, Perth’s mining sector faced cuts, project delays and closures. This affected jobs, wages and investment in Perth. As a result, the local economy took a hit and property prices began to fall. However, government initiatives at the time provided some stimulus to the economy. By the time 2020 rolled around, Perth’s property market was poised to bounce back. Perth has spent the past four years playing catch-up to other capital cities that had grown consistently throughout the 2010s.

Affordable

Despite a significant increase in Perth property prices last year, they remain among the most affordable of the state capitals, indicating there is room for further growth.

For example, CoreLogic’s March Home Value Index showed the median price of a home in Sydney was $1,139,375, Brisbane was $817,564, Melbourne was $778,892 and Adelaide was $734,173. Perth was $703,502.

High demand

Two further key indicators further cement Perth’s growth potential. Firstly, according to the Real Estate Institute of Western Australia (REIWA), properties are spending very few days on the market. In March, homes sold five days faster than the same period in 2023. Units sold 11 days faster.

Secondly, there is an increased need to invest in rental property as the rental market is extremely tight: REIWA reported that the city’s vacancy rate hit a record low of 0.4% in March.

This increased demand is being driven by population growth due to a recovering mining sector, interstate migration and an overall strong job market. This trend is expected to continue, with the state government predicting the city’s population will grow from the current 2.6 million to 2.9 million by 2031.

A smart investment

So Perth’s fundamentals appear to be strong, which should excite investors.

But buyers should also remember that not all areas within a city have equal potential. Certain suburbs, and even streets within those suburbs, may be significantly below the city average. That’s why it makes sense for investors to seek help from local experts with on-the-ground knowledge, not just a buyer’s agent.

Beyond the numbers

Investing in an unfamiliar market requires a deep understanding beyond just the numbers. There are several factors a smart investor should consider when researching a location that interstate agents won’t necessarily find online.

For example, a property located within a highly regarded school district may see a higher rate of price appreciation than a comparable property just outside that district. It helps to have inside information about the school districts in your city and their reputations.

Also, a property on one street may be better than a comparable property on an adjacent street due to factors such as traffic volume, noise levels, proximity to amenities, development potential, etc. A local buyer’s agent has actually walked that street and therefore understands that particular street and its characteristics in detail.

Boots on the Ground

Local buyers’ agents have strong relationships with real estate agents across Perth and can help you expand your buying possibilities. Off-marketA local buyer’s agent will also know who the best local building inspectors and property conveyancers are.

Use local

Perth’s property market offers attractive opportunities for smart investors looking for long-term growth and quality occupiers. The Perth market has experienced strong growth recently, but relative affordability, low days on market and strong population growth mean there is still considerable room for growth.

Using a local buyer’s agent who has the knowledge of where, what and when to buy will maximise your chances of securing the best quality property at a fair price.

Peter Gavalas is solve Real Estate Solutions

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