Investors are returning to Western Australia’s property market as property prices stabilise and rental returns begin to improve, a mortgage broker has claimed.
According to award winning mortgage broker Rael Bricker, managing director of WA-based mortgage broker House + Home Loans, there hasn’t been a better time to buy in years.
“Investors are definitely back buying. They’ve worked out that the market has bottomed out and that from here on in it is a buyer’s market,” he said.
"With new data revealing that a growing rental squeeze is gripping the state, local real estate is once again very alluring as an investment class.
“There is a very strong level of investor enquiry and activity at the moment. We as a business have never been busier, with $30 million worth of loan settlements recorded in January.
“Back in 2007 we had a massive spike in property prices – values rose by 46 per cent in just one year.
“Suddenly properties delivering rental returns of five per cent were delivering yields of just 2.5 or 3 per cent – so investors shied away. They couldn’t afford the shortfall.
“Now there is stability in the market and very strong rental demand off the back of the momentum in resources, with yields back up to 4.5 to 5 per cent.”
Median weekly rents in the Perth metropolitan area have jumped 8.1 per cent to $400 in the past year, according to data from the Real Estate Institute of Western Australia (REIWA).
Moreover, an undersupply of properties is causing rental prices to rise, with the metropolitan vacancy rate shrinking to 2.3 per cent. A number of agents have also reported strong demand for rental properties.
The latest figures from RP Data also confirm that Perth property prices are stabilising. The city’s median price contracted just 4.6 per cent in the year ending February 2012 to $446,000, with a 0.8 per cent improvement over the most recent quarter.
Strength in resources is a strong contributor to the state’s property market.
According to the latest Australian Bureau of Statistics (ABS) data, exports from WA in 2011 have increased by almost a third when compared to the year before, from $83 billion to $112 billion.
Unsurprisingly, iron ore tops the list of exports, followed by gold and crude oil.