Conditions across the Perth property market have conspired to create a ‘perfect storm’ of investment opportunity for apartment buyers finding themselves priced out of Sydney and Melbourne.
Firstly, let’s consider affordability. There exists a staggering difference between median property prices in Perth and larger cities in the eastern states, which has prompted growing interest in WA’s capital as a desirable investment destination. The average price variance between Perth and Sydney recently exceeded $450,000, which when compared to the long-term average of around $175,000, demonstrates the level of opportunity on offer in the west. Given that property markets around Australia usually follow the lead of Melbourne and Sydney, it’s only a matter of time before conditions improve in Perth.
Perth’s affordability is reinforced by a growing demand for apartment-style accommodation. Until recently, Perth was a city that was all about large homes on large blocks. That attitude is changing, and it’s changing fast. Demand for higher density living has increased significantly in recent years as more and more buyers turn to apartments as way of combatting congestion and avoiding urban sprawl.
Andrew Bouhlas, Director of Acquisitions & Developments at Psaros, said WA property buyers were increasingly turning to higher-density housing options, often in the city centre or inner-city suburbs, because they offered a more vibrant lifestyle close to amenities like cafes, restaurants and transport links. Another motivation, according to Mr Bouhlas, was the desire to avoid lengthy commutes to and from work by living closer to the city.
“It’s a fact that Perth residents living and working in or near the city experience considerably lower transportation costs than those living in Perth’s suburban outskirts,” he said.
“When you combine the financial savings of spending less time in the car with the lifestyle benefits of living nearer to the city, apartments are becoming an increasingly compelling living choice.”
But the major motivation for most people is lifestyle. West Australians are embracing a city that is fast becoming more cosmopolitan, vibrant and exciting. Community events, cultural festivals, markets, small bars, pop-up restaurants and thriving shopping precincts are part of everyday life in Perth and are helping the city forge a reputation for fun and vibrancy.
The growing demand for apartment living in Perth comes at a time when there is also growing need.
State Government infill plans are being developed to cater for a growing population, which is expected to double by 2050. As a result, more than 750,000 new dwellings must be built. Forecasts estimate that 48% of all new dwellings in the Perth metro area will be through infill developments, this means the completion of 9,500 apartments per year for the next 40 years.
Infrastructure upgrades across the city are supporting growth now and into the future. Perth is on the cusp of an exciting transformation with major projects set to turn the city into a truly world-class destination. These projects will enhance liveability and encourage greater investment in inner Perth. Ultimately, they will help bring world-class events to Perth, which in turn will bolster tourism activity, create more jobs and lead to even more demand for new inner-city dwellings.
Once this infrastructure arrives, property prices in inner Perth will also benefit – yet another reason why astute investors are beginning to see the city’s potential.
While opportunity is high, it remains important for investors to do their homework and consider options that are proven to work in Perth. Apartment complexes must offer the following in order to appeal to buyers:
“We have seen an increase in interstate investors across all our projects, and expect that number to increase in the near future. It’s inevitable that investors will look to where the next growth city is and all indicators are currently pointing to Perth,” said Mr Bouhlas.Share on Twitter Share on Facebook