{"id":1864,"date":"2022-02-15T19:14:33","date_gmt":"2022-02-15T19:14:33","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/are-perth-properties-undervalued-australian-property-investor-magazine-2\/"},"modified":"2022-02-15T19:14:33","modified_gmt":"2022-02-15T19:14:33","slug":"are-perth-properties-undervalued-australian-property-investor-magazine-2","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/are-perth-properties-undervalued-australian-property-investor-magazine-2\/","title":{"rendered":"Are Perth properties undervalued? | Australian Property Investor Magazine"},"content":{"rendered":"

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It\u2019s believed the current national imbalance is unsustainable and 2022 should see the Perth median house price gain traction as investors realise the city is undervalued.<\/p>\n

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According to Daniel McQuillan, managing director of Nu Wealth, Perth house prices have been \u2018massively undervalued\u2019 compared to the national average for Australian capital cities.<\/p>\n

\u201cThe latest national figures produced by the Real Estate Institute of Australia reveal that the median house price in Perth at $520,000 was the lowest median capital city house price across Australia and 45.9% lower than the national average.\u00a0<\/p>\n

\u201cThis is an historic anomaly that will be reversed beginning in 2022 based on the strong economic fundamentals in Western Australia over the coming years.\u00a0<\/p>\n

WA has the lowest unemployment rate in Australia at just 3.8% and the strongest economy nationally, with Mr McQuillan suggesting an additional 51,500 jobs are expected to be created this financial year with unemployment expected to remain very low over the next four years fuelling the demand for workers and housing.<\/p>\n

Almost ten years ago (Dec 2013) the Perth median house price was nearly the same as Melbourne. Now the median house prices have a $500 000 gap. The weighted average median house price for all Australian capital cities is sitting at $961 642.\u00a0<\/p>\n

It\u2019s believed the current national imbalance is unsustainable and 2022 should see the Perth median house price gain traction as investors realise the city is undervalued, with Nu Wealth believing Perth house prices should stay on an upward trajectory for \u2018several years\u2019.<\/p>\n

\u201cBased on the strength of Western Australian economy, the median house price in Perth should be at least on par with the weighted national average meaning the city has the capacity to gain an additional $400,000 in its median house price. \u00a0<\/p>\n

\u201cProperty investors in areas such as Sydney and Melbourne are now selling their properties as they believe the market their offers more downside than upside and they will start to invest in undervalued markets such as Perth particularly after our borders open from 5 February 2022. \u00a0<\/p>\n

With capital gains being the main game for investors, you want to invest in a suburb that delivers long term price growth, working with Real Estate Institute of WA (REIWA) we look at Perth\u2019s top performing suburbs for value growth.<\/p>\n

Perth’s top 10 suburbs for capital growth<\/strong><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Suburb<\/th>\n

<\/p>\n

Median house price (Sept 2021)<\/th>\n

<\/p>\n

1-year value growth<\/th>\n

<\/p>\n

10-year value growth<\/th>\n

<\/p>\n

Days on market<\/th>\n


\n<\/tr>\n

Daglish<\/a><\/td>\n

<\/p>\n

$1,367,500<\/td>\n

<\/p>\n

50.3%<\/td>\n

<\/p>\n

56.4%<\/td>\n

<\/p>\n

6<\/td>\n


\n<\/tr>\n

Highgate<\/a><\/td>\n

<\/p>\n

$1,008,000<\/td>\n

<\/p>\n

58.7%<\/td>\n

<\/p>\n

32.6%<\/td>\n

<\/p>\n

51<\/td>\n


\n<\/tr>\n

Claremont<\/a><\/td>\n

<\/p>\n

$1,825,000<\/td>\n

<\/p>\n

40.4%<\/td>\n

<\/p>\n

39.3%<\/td>\n

<\/p>\n

26<\/td>\n


\n<\/tr>\n

Bicton<\/a><\/td>\n

<\/p>\n

$1,255,000<\/td>\n

<\/p>\n

41.4%<\/td>\n

<\/p>\n

34.9%<\/td>\n

<\/p>\n

14<\/td>\n


\n<\/tr>\n

Watermans Bay<\/a><\/td>\n

<\/p>\n

$1,220,000<\/td>\n

<\/p>\n

41.9%<\/td>\n

<\/p>\n

34.1%<\/td>\n

<\/p>\n

18<\/td>\n


\n<\/tr>\n

Waterford<\/a><\/td>\n

<\/p>\n

$1,200,000<\/td>\n

<\/p>\n

31.9%<\/td>\n

<\/p>\n

43.3%<\/td>\n

<\/p>\n

56<\/td>\n


\n<\/tr>\n

Cottesloe<\/a><\/td>\n

<\/p>\n

$2,550,000<\/td>\n

<\/p>\n

32.1%<\/td>\n

<\/p>\n

41.7%<\/td>\n

<\/p>\n

17<\/td>\n


\n<\/tr>\n

Ascot<\/a><\/td>\n

<\/p>\n

$840,000<\/td>\n

<\/p>\n

35.5%<\/td>\n

<\/p>\n

20.9%<\/td>\n

<\/p>\n

43<\/td>\n


\n<\/tr>\n

Salter Point<\/a><\/td>\n

<\/p>\n

$1,355,000<\/td>\n

<\/p>\n

29.2%<\/td>\n

<\/p>\n

39.3%<\/td>\n

<\/p>\n

20<\/td>\n


\n<\/tr>\n

Trigg<\/a><\/td>\n

<\/p>\n

$1,507,500<\/td>\n

<\/p>\n

31.1%<\/td>\n

<\/p>\n

55.8%<\/td>\n

<\/p>\n

20<\/td>\n


\n<\/tr>\n

Greater Perth average<\/td>\n

<\/p>\n

$520,000<\/td>\n

<\/p>\n

+8.3%<\/td>\n

<\/p>\n

+9.5%<\/td>\n

<\/p>\n

21<\/td>\n


\n<\/tr>\n<\/tbody>\n<\/table>\n

Source: REIWA, September 2021<\/p>\n

Daglish <\/strong><\/a>\u2013 Sitting at the top as strongest performing suburb for long term performance and coming in second for growth over the 12 months to September 2021, the median house price is well over the Perth median price at over $1.3m with houses being sold in under a week once advertised.<\/p>\n

Jennifer Wakeman, General Manager of Momentum Wealth says, \u201cThere are key drivers that explain Daglish\u2019s outperformance.<\/p>\n

\u201cLocated just 4 kilometres from the city centre, the neighbourhood has close proximity to the employment nodes of the CBD and Subiaco. This underpins demand from tenants (mainly young people and families), who are also looking to be near Kings Park and other attractions. This appeal is a key factor behind Daglish\u2019s 10-year price growth of 56.4%.\u201d<\/p>\n

Highgate<\/strong><\/a> \u2013 one of Perth\u2019s smallest if not the smallest suburbs, Highgate is less than 2km from the CBD and topped the year to November 2021 price gains of 58.7% but tends to lag on longer term growth, with median house price of $904 600,\u00a0 prices rose 32.6% over the last 10 years.<\/p>\n

Claremont<\/strong><\/a> \u2013 rounding out the Top 3, Claremont\u2019s median price of $1.8million plus makes Claremont one of the most expensive suburbs in Perth, and as Ms Wakeman explains, \u201cthis premium location has provided investors and homeowners with 1-year price gains of 40.4% and 10-year capital growth of 39.3%.\u201d<\/p>\n

The top 10 suburbs for capital growth in WA are all high-end premium suburbs. They offer access to quality schools, large open green spaces and parks and plenty of employment options, with selling times on the market typically lower than the city wide average.<\/p>\n

\u201cThis reflects the market recovery in Perth, which has been driven by owner-occupiers to date. Homeowners have seen their equity rise, and many are seizing opportunities to upgrade into blue ribbon suburbs,<\/p>\n

\u201cIn addition, we\u2019re seeing strong demand from returning expats seeking homes in premium suburbs with an appealing combination of lifestyle plus proximity to the Swan River and the ocean.\u201d observes Ms Wakeman.<\/p>\n

Properties in these suburbs tend to be few and far between and development sites are minimal with very few lots available for development. This scarcity coupled with strong demand inevitably increases values, and its this scarcity from an investment point of view in comparison to investing in an outer, more affordable suburb with housing supply in abundance that can limit future capital growth.<\/p>\n

So are Perth\u2019s prices undervalued?<\/strong><\/p>\n

While the top suburbs have been owner-occupier suburbs early indications show a return in investor activity across various price segments of the market, with ABS figures showing investor lending increased 87% in the 12 months to October 2021.<\/p>\n

\u00a0\u201cGiven rising affordability pressures in the more expensive east coast markets, many interstate buyers are looking towards alternative locations for investment \u2013 as one of the cheapest capital cities to buy, and given the continued opportunity for both growth and yield, Perth stands out as a natural choice for many of these buyers.\u201d<\/p>\n

\u201cThe fundamentals behind Perth\u2019s property market are all in great shape. The WA economy grew 4.3% in 2020-21 \u2013 the strongest of all states for the second year in a row. This growth is creating job opportunities, and WA now has the second highest rate of interstate migration nationally behind Queensland \u2013 and all these people need somewhere to live.\u201d Said Ms Wakeman.<\/p>\n

\u201c2022 is shaping up to be a breakout year for the Perth property market and investors should act now and get in early before prices start to rise rapidly especially in undervalued suburbs of Perth,\u00a0located in areas of traditionally high capital growth in the city such as close to the CBD, ocean and river,\u201d Mr McQullian concluded. \u00a0\u00a0<\/p>\n

Perth\u2019s rental growth <\/strong><\/p>\n

Some property investors seek capital growth. Others priortise regular income. So which suburbs best performed for strong rental growth?<\/p>\n

Perth’s top 10 performing suburbs for rental growth 2021<\/strong><\/p>\n

Sources: ^DSR Data. *REIWA, September 2021<\/p>\n

Waterford <\/strong><\/a>\u2013 With a median overall rent of $595 weekly, Waterford had an almost 50% growth in rents for the 12 months to September 2021. According to Amanda Kroczek, team leader, Momentum Wealth, the suburb\u2019s growth has been at the hand of increased demand from local university students with Waterford close to Curtin University, and from demand from families looking for green open spaces and the proximity to the Swan River.<\/p>\n

\u201cWhen you look at the statistics, Waterford hasn\u2019t just outperformed for rent, it\u2019s also come up trumps for capital growth,\u201d says Amanda Kroczek, Team Leader Momentum property group.<\/p>\n

\u00a0\u201cThis neighbourhood has seen values grow by 11.1% over the past 12 months \u2013 and by 44.6% over the last decade. Capital growth plus rental growth is an important combination in the property market.\u201d<\/p>\n

Kallaroo<\/strong><\/a> \u2013 coming in second place, Kallaroo has a weekly median rent of $670 and saw rents rise 39.5% in the last year.<\/p>\n

\u201cKallaroo enjoys strong demand among tenants looking for proximity to the beach, and it offers the added appeal of nearby Whitfords City Shopping Centre. The suburb boasts good transport links to the city, it\u2019s close to marinas, and within walking distance to shopping precincts \u2013 all factors which hold strong appeal with tenants.\u201d Said Ms Kroczek.<\/p>\n

Beaconsfield<\/strong><\/a> \u2013 South of the river towards Fremantle, Beaconsfield rounds out the top3 with a 31.27% increase, and has done well for capital growth. Ms Kroczek added, \u201c\u201cThere\u2019s a lot for investors to love about Beaconsfield – Proximity to the beach, Fremantle CBD and key education institutions like South Metro TAFE, make this a popular choice among tenants.\u201d<\/p>\n

Like the top performing suburbs for capital growth, the top suburbs for rental growth boast close proximity to employment hubs and educational institutes, are waterfront areas (River or Ocean) and have plenty of \u2018green zones\u2019.<\/p>\n

However, the key takeaway \u2013 with the possible exception of Northbridge which still faces significant levels of oncoming stock and a smaller owner-occupier demographic, is that robust rent growth is coupled with strong capital growth.<\/p>\n

Momentum Wealth\u2019s General Manager, Jennifer Wakeman, explains, \u201cThis is a win-win for investors \u2013 robust rental performance may help properties in the top performing locations become positively geared over the longer term. This supports a positive cashflow and can assist with an investor\u2019s reduction of debt.<\/p>\n

\u201cYet these same neighbourhoods are also benefiting from impressive uplift in values. Rising rent plus healthy capital gains don\u2019t always work in tandem. But it\u2019s happening in these suburbs, and the uptick in values gives investors more opportunities to leverage increasing equity to build their property portfolios.\u201d<\/p>\n

It\u2019s an important reminder to investors on the long-term benefits of the right suburb selection.<\/p>\n

\u201cIt just shows that buyers who make an informed decision about where they invest can benefit from a stronger performance in all aspects \u2013 combined, these factors set investors well-ahead when it comes to expanding their portfolio sooner, and ultimately achieving greater long-term wealth.\u201d<\/p>\n<\/p><\/div>\n