All signs point to positive apartment investor activity

We have seen plenty of anecdotal evidence that the investor market for apartments in Western Australia is returning to more normalized levels, with official data supporting this.

Data from the Australian Bureau of Statistics showed that in the year to November 2021, $5.62 billion in home loans were made to Western Australian investors, nearly double what had been recorded during the previous corresponding period.

The stats I have collated using more recent figures suggest that for WA alone there was a 65% increase in investors for January 2022 compared to January 2021.

These statistics are primarily based on investors buying completed homes and with well documented future supply issues with apartments, as well as WA’s population expected to grow by 30,000 in 2023, we will continue to see the number of investors increase.

I have said before that as the investor market returns to supplement the homeowner market, we must ultimately see continued price appreciation as supply issues remain.

Data from CoreLogic shows that in February Perth home values ​​increased by 0.3%, bringing the increase over the past year for Perth home values ​​to 8.6%.

These values ​​are only 1.2% lower than the record level recorded in June 2014.

Interestingly, in some areas house and apartment prices in Perth are rising faster than house prices.

Information collected by REIWA shows that in the 12 months to September 2021, 68% of all properties sold were homes, while 17% were units and the remaining 15% of sales were vacant land.

Comparing sales prices, REIWA said 19 Perth suburbs saw unit prices rise faster than house prices over this period, with the median house price at $520,000 while the median unit price was $405,000.

REIWA chairman Damian Collins said Perth’s housing market had been hit harder than houses during the recent market downturn, with house prices down 17% from a high of 450,000 dollars in 2014 to $375,000 in 2020, while housing prices have only fallen by 13%.

He said that as unit prices continue to recover, we should see the gap created by the previous downturn narrow, with unit market growth expected to continue through 2022.

Key to this event is the continued momentum of the investor segment’s return to the WA apartment market. WA remains one of Australia’s most affordable markets. The average mortgage for homeowners is at record highs in every state except WA, with the state’s median home value currently around $530,000, compared to a closer national figure of $795,000.

Meanwhile, WA has seen a sharp rise in rental prices, with some reports suggesting rents have increased by more than 15% over the past 12 months. Rents have risen in the house and apartment markets, rental yields – a key indicator for investors, as well as potential homeowners who want to own rather than rent – ​​have returned to well over 4%.

The limited future supply of apartments, combined with very low rental vacancy rates and an expected increase in WA’s population all point to an attractive environment for apartment investors, with local apartment prices continuing to rise. enjoy.

About Gene Schafer

Check Also

Viewpoints: Low-income residents need more market-priced apartments

“Viewpoints” is a place on Chapelboro where locals are encouraged to share their unique perspectives …