Perth's real estate market in 2024 presents a wealth of opportunity for both investors and home-owners alike at present, reflective of its unique position within Australia's broader economic and geographic context. As an investor, understanding the multifaceted nature of this market is crucial to navigating its potential highs and lows.

Given the relative income levels to property prices in the Western Australian capital city, it’s understandable that many property investors are looking to Perth for their next property but it’s important to understand the key drivers, and the properties that will deliver long-term positive outcomes for investors.

The Lure of Economic Growth and Infrastructure Development

There are a number of key drivers that are making the Perth property market particularly attractive for investors and based on our internal analysis.

• Economic Resilience: Perth's economy, buoyed by its robust resources sector, stands as a beacon of stability and potential growth. This resilience in the face of global economic shifts provides a solid foundation for real estate investment, promising potential returns in a city that's strategically positioned to capitalise on both domestic and international trade flows. Given the long-term growth trajectory of China, we expect to see commodity prices remain buoyant going forward, particularly in relation to iron ore, natural gas and agricultural products.
• Infrastructure Investments: The city's commitment to infrastructure development further enhances its appeal. With significant investments in transportation, healthcare, and educational facilities, Perth is not just expanding its physical landscape but also enriching its socio-economic fabric. These developments not only improve the quality of life for residents but also increase the attractiveness of real estate investments in the area.
• Lifestyle Appeal: Beyond the economic indicators, Perth's lifestyle is a significant draw for both residents and investors. The city's pristine beaches, expansive parks, and enviable climate make it a sought-after destination for those looking to invest in a location that offers both financial returns and a high quality of life. Not dissimilar to much of the country, there is a strong preference in Perth to be near the water, whether that be the coastline or the river, where property prices trade at a premium.
• Population Growth: Demographic trends further underscore the potential for residential real estate investment. Perth's growing population, driven by both natural increase and migration, signals a rising demand for housing. This demographic momentum is poised to translate into sustained interest and activity in the real estate market.

Affordability in Comparison

As mentioned at the beginning of this article, there is a strong argument for the affordability of Western Australian property, particularly in relation to the east coast.

• Market Accessibility: When compared to Australia's other capital cities, Perth stands out for its relative affordability. This accessibility opens up opportunities for a broader spectrum of investors, from those looking to enter the market for the first time to seasoned investors seeking to diversify their portfolios with properties that offer competitive yields.
• Investment Opportunities: Identifying the right investment opportunities requires a keen eye for value. In Perth, certain suburbs and property types present particularly compelling cases for investment, offering a balance of affordability, potential for capital growth, and rental yield. We have a preference for identifying those tightly held suburbs with a strong owner-occupier appeal, and relatively high median income levels which is a key driver for property prices over the long run.

The Flip Side: Market Volatility and Cyclical Nature

Like any investment market, Perth's real estate landscape is not without its risks. The market has experienced its share of volatility, influenced by both internal dynamics and external economic pressures. Understanding these fluctuations is key to developing a strategic approach to investment that can weather potential storms.

The cyclical nature of the real estate market, characterised by periods of rapid growth followed by adjustments, can pose challenges to investors. Recognising the signs of these cycles and planning accordingly is essential for long-term success in the market. This is particularly true for the Western Australian property market, which has over recent years been influenced by rising and declining commodity prices.

As we've explored the economic, demographic, and lifestyle factors that contribute to the attractiveness of Perth's real estate market in 2024, it's clear that the opportunities for investment are both rich and varied. However, the market's inherent volatility and the cyclical nature of real estate investment demand a measured, informed approach. In the following sections, we will delve deeper into the regulatory landscape, economic uncertainties, and the latest market data to provide a comprehensive analysis of what investors can expect as they navigate this dynamic market.

Navigating Regulatory Changes and Market Uncertainty

It’s important to also consider the role that Government policy plays in driving future property prices. Outlined below are a few key examples in looking at the Perth market.

• Government Policies: The impact of governmental policies on the real estate market cannot be overstated. From zoning laws and construction regulations to taxation policies and incentives for first-time homebuyers, these factors play a critical role in shaping the investment landscape. It's vital for investors to stay informed about these changes, as they can significantly affect property values and investment viability. One such example is the reduction of the red-tape associated with the construction of granny flats in WA, which will undoubtedly drive greater demand for the Perth market.
• Economic Uncertainty: The global and national economic outlook can introduce a level of unpredictability into the real estate market. Interest rate fluctuations, employment rates, and international trade dynamics can all influence the performance of Perth's property market. Investors should consider these macroeconomic factors when planning their investment strategies, as they can impact both the short-term profitability and long-term growth potential of their investments. It's also noted that Perth offers a more favourable environment for investors compared to other regions, with less government interference perceived in the market. This aspect, along with Perth's affordability and high rental yields, is attracting interstate investors, further buoying the market.

Delving into the Data: Understanding Market Trends

Perth's median house prices are expected to see a substantial increase, with predictions indicating growth rates starting at 8.2% early in the year, peaking at 8.4% by June, and then slightly adjusting to 8.0% by the year's end. The median house price is forecasted to reach $690,000 by June 2024, marking a significant rise from the previous year. Unit prices are also expected to grow, albeit at a slower pace, with a predicted increase reaching $459,000 by 2025​​.

The rental market in Perth is set to remain strong with low vacancy rates and high rental yields, indicating a robust market. Median rental prices have shown significant increases, with house rents expected to hit $600 per week. This growth in the rental market underscores the ongoing demand in Perth's property scene, further fuelled by population growth and limited housing supply​​​​.

Further, there's an increasing interest from interstate investors, drawn by Perth's affordability relative to their home states, potential for capital growth, and favourable treatment of investors compared to other regions. This trend is buoyed by the city's robust economy and attractive rental yields, making it an appealing market for property investment​​.

The Perth market faces challenges related to housing supply, with the building industry averaging the completion of 14,000 new homes in the past three financial years. Although the state government has implemented measures to boost housing supply, it's expected to take time for these efforts to translate into more available houses. This supply constraint, coupled with strong demand, continues to put upward pressure on prices​​.

Overcoming Obstacles: Strategies for Success

With any property investment strategy it’s important to ensure that you have the right risk management tools in place. Effective risk management is crucial in navigating the uncertainties of the Perth real estate market. This may involve diversifying investments across different property types and locations, locking in interest rates to guard against future increases, or setting aside reserves to cover unexpected expenses.

Real estate investment is often most successful when approached with a long-term perspective. This involves looking beyond temporary market fluctuations and focusing on the underlying value and potential of properties over time.

Conclusion: The Path Forward in Perth's Real Estate Market

As we've explored the multifaceted nature of investing in Perth's residential real estate market in 2024, it's clear that while opportunities abound, they come with their own set of challenges. By understanding the economic, demographic, regulatory, and market-specific factors at play, investors can make more informed decisions. Success in this dynamic market requires not only a keen eye for opportunity but also a robust strategy for navigating its complexities.

In conclusion, Perth's real estate market in 2024 presents a compelling landscape for investors willing to delve deep into its intricacies. With the right approach, informed by the latest data and expert insights, investors can navigate the market's challenges and capitalise on its opportunities. As always, staying informed, adaptable, and forward-thinking will be key to achieving investment success in Perth's vibrant real estate market.

Embark on your property investment journey with Ally Property Group, your trusted ally in Australia's real estate market. Our expert advisers are dedicated to crafting personalised investment strategies for Australian expats and residents alike, aiming to enhance your portfolio and maximise returns. Start building your wealth with Ally Property Group, where strategic insights, analysis and modelling leads to prosperous investments.

We’re more than just property advisers. As Australian expats ourselves, we've navigated the intricate world of property investment both at home and abroad. With a legacy rooted in financial services, we offer a holistic, transparent, and strategic approach, ensuring you're equipped with the knowledge and confidence to make informed decisions.

Book an obligation-free, complimentary consultation here today.

General Information Warning: The information contained herein is of a general nature only and does not constitute in any way, personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional property investment advice specific to your circumstances.