While the property markets of Sydney and Melbourne are now so scorching hot that investors no longer want to touch them, Bloomberg Business reported that Perth, the capital of Western Australia capital, may become the next hotspot for property buyers down under with Asian investors leading the way.
Housing values, as measured by CoreLogic Inc., dropped 3.7 percent last year in Perth. This was the worst performance among the capital cities in Australia as the region’s mining boom dissipated. However, Lloyd Jenkins, managing director at CBRE in Perth, told Bloomberg Business that he believes now is a good time to buy and Asian buyers have already started showing interest in the city.
Perth property is relatively cheap when compared to the record-breaking prices currently being recorded on the east coast of Australia. According to Jenkins, Chinese investors that have favored the overheated markets of Sydney and Melbourne could now turn their attention towards Perth in search of a better investment.
“The market starts in the so-called nerve center of Australia, being Sydney, and it works its way until yield compression gets to a point that it’s not worth playing; then they move north to Queensland and then eventually they cross the Nullarbor,” Jenkins noted. He pointed out that eventually investors make their way to Western Australia and Perth.
According to CoreLogic, returns for investors in Perth are higher than in Sydney and Melbourne at the moment. In January of this year, the rental yield in Perth was 3.8 percent while in Sydney the yield was at 3.4 percent. Melbourne recorded a three percent rental yield.
“We have seen a lot of Asian buyers,” Angus Murray, managing director at property broker PRD Nationwide, explained to Bloomberg Business. He also noted that many of the current investors had connections to Perth such as residency permits or relatives but more independent investors could soon be on the way. “We are not seeing those mass numbers of foreign investors yet, but my view is that is coming. It will be a significant part of the market in Perth,” he claimed.
Psaros, a Perth-based property developer with a Chinese-language website, reported that it is seeing strong interest from Asia for its more than 1,500 apartments either delivered, under construction or proposed, according to Bloomberg Business. “They see the untapped potential of a relatively young, growing city they previously didn’t have access to and there is significant pent-up demand,” Psaros managing director Mike Enslin said.
Image: Perth via westernaustralia.com
