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The Right Time to Invest in Perth

Artists impression pictures of the new footbridge to connect East Perth with the Burswood peninsula as part of the new Perth stadium project.
Source: Government of WA

“I like Perth and am thinking of investing in property there, but everyone says now’s a bad time. When is it a good time to invest?”

Here’s a valid and oft-asked question. True, the Perth property market has hit a low but could now be the best time to focus on the Perth property market? Our answer is: “YES”.

Questions will arise as to why now is a ‘bad’ time for investment, but here are 5 Reasons that challenges the status quo and explains why the time is NOW.

#1 Affordable prices. Big choices. Greater yield potential

The Perth property market is at the bottom of the current property cycle. Property prices here are among the most affordable of any capital city in mainland Australia, and half that of Sydney — perhaps the most affordable it has ever been. Perth residents are spending 21.5% of their monthly household income on mortgage repayments, the lowest in 10 years, says a report from Moody’s. By contrast, homeowners in Sydney are spendng 39% and 34% respectively of their income on mortgage. Simple math works out that you can buy more at $500K in Perth, with a pick from some of the most prime locations (compared to Melbourne or Sydney) and still likely achieve a discount off the listed price.

Once the property market starts to go up again, you stand to reap significant benefits. The market is already buzzing that Perth property market cycle will turn in 2017, with prices going up albeit at a slow and steady rate.

#2 Perth Economy – More than Just Mining

Western Australia is rich with resources in a region and world in need of iron ore, bauxite and liquefied natural gas. But Perth is more than a mineral supply; Western Australia is well positioned to serve as a base for military back operations and transportation and logistics businesses that service the western half of the continent.

Plans are afoot to bring a vibrance to the economy and transform Perth by 2021 thanks to several multimillion-dollar infrastructure projects:

  • New additions to Perth CBD & skyline to include apartment towers and a Ritz-Carlton Hotel at Elizabeth Quay, a public square and marketplace at the Perth City Link and a new museum in the cultural centre
  • A $12 billion boost to tourism by 2020 will see four new hotels built in the CBD, whilst suburbs such as Shenton Bay, Cottlesloe, Armadale, Gosnells and Butler, among others, would start to take shape as development stepped up along major transport routes.

But back to mining: both Pilbara Minerals and Altura Mining have announced plans to secure abandoned workers camps in Roy Hill for their future mining projects. Additionally, there is growing investment in lithium and the world’s premier producer of lithium concentrate from spodumene, Tianqi Lithium, has confirmed plans to build a $400-million lithium hydroxide plant in Kwinana which will create 500 jobs.

Estimated & projected population, larger Greater Capital Cities – 1973 to 2053. Source: ABS

#3 Growing Population

Perth today is like Sydney 20 years ago, some say. With the growth in infrastructure, the City of Perth’s population alone is forecast to grow from 22,324 last year to 27,317 in 2021. But that aside, Perth’s population is on a long-term upward trajectory with expert predictions that its population could be at least 3.9 million people or nearly double what it is today by 2050. Perth is expected to supersede Brisbane in becoming Australia’s third largest city by 2028 according to the Australian Bureau of Statistics (ABS). ABS also predicts that Perth will grow at a rate of 187% between 2012 and 2061.

#4 Long Term Success

The west has gone through a number of cycles before, previously in the 1990s and then the early 2000s, with the last good year being 2012 during the mining boom (if you held property over the long term, you would have gained significant capital growth). Long-term residents and business operators well understand the west’s cycle of growth and development and realise how these cycles represent opportunity for expansion and investment.

Perth is now in a state of adjustment and has been since 2013. Experts are predicting the market will pick up in 2017 albeit at a slow pace, and savvy investors are taking their pick of properties in the city, in anticipation of growth. Nerida Conisbee, REA group chief economist says, “It’s not about the short term. Perth is for someone with a slightly stronger appetite for risk, but they’ve got a longer window for investment so it’s for someone on a high income, who is in a younger age bracket, someone who can absorb the first couple of years being slightly choppy in terms of performance.”

Artist impression of the Perth City Link project. Source: https://yhoo.it/2giZDic

#5 Jobs Growth

Yes, unemployment has taken a bit of a dip, but there are job opportunities on the cards, what with new infrastructure in the city, which includes a new sports stadium, road and rail upgrades, new social projects planned along the Swan River, among others (see #2). In September, recruitment specialists DFP Recruitment says there is a cause for cautious optimism after a 16.3% increase in job ads in WA (mainly in mining) over the past 12 months — the biggest growth of any state.

Conclusion: Buck the Trend

Most property investors follow the herd, investing in growth markets and competing with each other, causing prices to increase. Investing at the bottom of the cycle, with careful observation of the market, means you get substantial growth when the cycle peaks. Remember, all property markets go through cycles.

CSI Properties (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: Cornerstone International does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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