Increase in interest rates in 2022

Downturn of property dwelling values across the lower Eat Coast of Australia

Hello, everyone. Simon Deering, the co-founder of You&Me Personalised property Services. The Buyer’s Agents Made for You.

Today, I want to discuss the headlines that are dominating the real estate market. They are, of course, the increase in interest rates and the downturn in property dwelling values, particularly across the Lower East Coast of Australia.

CoreLogic stats about the Perth property market

What I find most interesting is that CoreLogic have just released an article that shows Perth is bucking the trend.

In fact, while the Lower East Coast is experiencing the downturn, Perth is still increasing in values and there are a number of reasons why and quite a lot to unpack.

Perth property value since 2000

So let’s take a step back in time.

Perth property market: 2000 to 2007

Back to 2000. From 2000 to 2007. Perth property values more than doubled. We had a really strong economy that was being driven a lot by China and we had low unemployment and we had really good employment wages compared to the rest of the country.

Perth property market in 2014

In 2014, Perth had hit its peak dwelling values and then from mid 2014 all the way through to June 2020, Perth had been on a decline.

Perth property market in 2020-2022

But from June 2020 to June 2022, Perth has experienced 24.5% capital growth across as a whole across its Perth dwelling values. The really interesting thing here is that we are only point 9% higher than where we were in 2014.

So even though we’ve had all of this growth, along with a lot of other states between June 2020 to June 2022, the Perth value, the Perth affordability is still very much there, which means there is still exceptional room for more capital growth here in Perth. There are also a number of other reasons that are going to lead to continued growth and continued confidence in Perth and the big one being its affordability.

The 4 capital cities in Australia

When we talk about real estate in this country, the top performers are really the four big capital cities. And when we talk about the four big capital cities, we’re talking about Sydney, we’re talking about Melbourne, we’re talking about Brisbane and we’re talking about Perth.

Perth being the most affordable. So as there is a downturn across the East Coast that is putting additional pressure or an increase in demand for the appetite for Perth property.

More interstate buyers buy property in Perth

So for the last two years the appetite for Perth property has really been predominantly from West Australians and locals. But right now over the last four months we are already seeing a huge upswing, a huge increase in desire from the East Coast to start purchasing property here in Perth.

Buying in Perth and WA: an increase of demand

So the increase in demand match with the shortage of supply is going to continue to drive prices up here in Perth.

Perth property affordability

You have to understand that if you are living in Sydney right now, a $600,000 property investment isn’t going to get you very far. I don’t even know if you can get a studio in Sydney right now for $600,000. But what I do know is that if you’re living in Sydney and you’ve got $600,000 to invest, you could buy 4 bedrooms and 2 bathrooms property, 30 minutes from the city, a coastal suburb here in Perth, that’s going to return you around $550 to $600 per week in rental income, which equivalates to about a four and a half to 5% return.

You’ve got to with that you’re going to have a 4 by 2 around 150 to 200 square meters of living space. And you’re going to occupy anywhere from 450 to 600 square meters of land. That in itself is what is helping all of the East Coast buyers have confidence in purchasing Perth. It’s the perception of value that’s the key in real estate.

Perth is sustainable and viable

Another thing in real estate is having a market that is both sustainable and viable. Perth is both sustainable and viable. When you look at the average incomes that you are earning here in Perth and you compare them to Sydney, Melbourne and Brisbane, they’re actually on par. But when you look at the housing values, housing values in Sydney are almost three times the amount here in Perth.

Lowest vacancy rate in the country

So that is another reason why there’s going to be increased demand and a lot of potential for continued growth here in Perth matched that with the lowest vacancy rates across the country and some of the best rental returns. It’s another reason why you’d be wanting to invest in Perth. So, in short, yeah, look, interest rates have increased. It’s not affecting Perth because of the affordability and the latest CoreLogic stats are backing that up.

Shortage of supply and huge demand

In simple terms, simple economics, supply and demand.

Right now we have a shortage of supply. We have huge demand. It’ll continue to give confidence in the Perth property market with only 0.9% higher than where we were in 2014. So there’s lots and lots of room for growth.

We help property buyers buy in Perth

So guys, if you would like to find out how the team at You&Me Personalised Property Services can help you and your particular situation, all you need to do is reach out and get in touch with the team at You&Me Personalised Property Services and booking your free discovery session today.

Until next time. Happy investing.