East coast investors with no intention of moving to Western Australia continue to fuel Perth's property boom, with one settlement agent saying she has never seen such high demand from interstate buyers.
Key points:
- A growing number of east coast investors are buying houses in Perth
- Demand from interstate buyers has contributed to rising property prices
- More affordable housing and high rent returns make the market attractive to investors
Data released this week showed home values in the south-eastern Perth area of Armadale surged by 25 per cent in 2023, the biggest annual increase in Australia.
Local real estate agent Grant Wilson estimated about 70 per cent of the area's prospective buyers were based on Australia's east coast.
BAFC Settlements licensee Anne Meiklejohn said the trend had only emerged in the past 12 months.
"In the past, we had very few investors seeking the opportunities over here," she said.
"When you compare our prices to the eastern states, it's a much easier market to get into."
The median Sydney property price last year hit $1,128,322 according to data released this week by CoreLogic, a rise of 11.1 per cent.
Perth's median house price was little more than half that, at $660,754, a 15.5 per cent increase.
Ms Meiklejohn said the new buyer market was having a direct impact on property prices, with an Armadale home recently selling for more than double the previous listing price in 2018.
"It's forcing prices up. People are offering more than what they are on the market for," she said.
"We've had one [offer] come in at $80,000 above what was on the market."
Ms Meiklejohn said the prospect of high rent returns continued to attract investors.
The latest data from the Real Estate Institute of WA (REIWA) put the average cost of renting in Perth at $600 a week, 15 per cent higher than the same time in 2022.
December figures showed rent rises were up to 20 per cent higher than the previous month in suburbs like Kewdale.
'Critical shortage' of rentals: REIWA
Real Estate Institute of Western Australia (REIWA) president Joe White said costs were not expected to change for some time.
"We do seem to see a little bit more stock coming on … and the rents [are] stabilising a bit, but we still have a pretty critical shortage of supply," he said.
"I think we still have a fair way to go before we see the pressure ease off."
Mr White said he was yet to see any "hard data" indicating the level of investment in the Perth market from east coast buyers.
But he said the interstate interest could be good news for renters.
"When an eastern states investor buys with a view to renting, at least that's one property that we keep in the rental pool," he said.
"We lost 18,000-20,000 properties from that rental pool in the post-COVID period, and that's what caused our rental vacancy rates to plummet to 0.7 per cent."
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