While Perth’s property market remains weak, investors are swooping in to take advantage of the city’s downward trend.
Lower prices and record low interest rates are offering the “perfect storm” of opportunity for buyers, according to Realmark real estate agent Daniel Sharp.
The Western Australian capital recorded a 2.4 per cent fall in median house prices over the past year, according to Domain’s House Price Report for the September quarter.
Unit prices are down 1.9 per cent from a year ago but did offer a glimmer of hope for the resources-affected market, ticking up 2.8 per cent over the three months to September.
The city has seen a modest influx of both interstate and international investors despite the weak economy, showing confidence in Perth’s lukewarm market.
“There has been a small return of investors from outside Perth,” REIWA president Damian Collins told Domain.
“Bargain hunters are buying properties where they can get a decent yield with interest rates being low, meaning investment properties are usually neutral or positively geared.”
Savvy investors from Sydney and Melbourne have set their sights towards the west, discouraged by sky-high property prices in the two major east coast capitals.
“There have been more enquiries from over east as they can see how much more affordable Perth is compared with their own market,” he said.
“Investors can see that they can get more value in Perth for the dollar.”
Perth’s median house price of $527,107 is less than half the Sydney median price of $1,079,491, and well below Melbourne’s $855,428.
Even the introduction of a 7 per cent stamp duty surcharge on foreign buyers in January this year has not deterred overseas investors looking for investment bargains in Australia’s south-west. The tax is set to be discounted by 75 per cent for off-the-plan buyers within the next two years.
Realmark’s Mr Sharp said there had been increased interest from overseas markets, including Hong Kong, the site of ongoing mass pro-democracy demonstrations.
“Recently, we had two buyers from Hong Kong purchase properties,” he said.
“The main reason why overseas investors are buying in Perth is that there is a contrast in prices compared to other Australian cities. It is extremely affordable, and there is a great discount on price.
“Despite soft sale conditions, the rental market remains strong within the Perth CBD, and it is a safe option that is not affected by any political climate.”
Mr Collins suggests the small surge in Hong Kong investment is due to the country’s current political state, with demonstrations continuing for weeks.
“It is not surprising with Hong Kong buyers, as Perth can be a place to secure their capital,” he said.
“In case something does go wrong, people have somewhere to go, and Perth offers that security.”
He said Hong Kong investors see the potential to get more bang for their buck with property prices up to five to six times cheaper in Perth.
Despite the market being slow, Mr Collins says it’s still early days with investors catching onto Perth’s bargains.
“Investors usually are 30 per cent of the market, but currently they are well below that percentage, based on feedback from agents on the ground,” he said.
“However, there has been a moderate improvement recently, and I expect a big jump in the number of investors buying as the market recovers.”