WESTERN Australia is becoming increasingly attractive to eastern States property investors with the number of east-coast investors purchasing property in the local market doubling in the past 12 months
Property Buyers Bureau managing director David Devenish said the percentage of eastern States buyers using the bureau to source investment properties had increased from 10 per cent in 2002 to more than 20 per cent.
“Property investors in the eastern States now regard the Perth real estate market as undervalued and having higher rental yields compared to eastern States capital cities,” he told WA Business News.
Mr Devenish said that during the past three years the median price differential between Perth and Sydney homes increased by more than $100,000.
During the March quarter of 2003 the median house price in Sydney was $460,000 compared with Perth’s figure of $202,600. In comparison, during the March quarter of 2000, the median house price in Sydney was $308,000 and the Perth median house price was $158,000.
Mr Devenish said rental returns from Perth investment properties were generating returns of more than 5 per cent, while Sydney returns had fallen below 4 per cent.
He said the current high activity by eastern States investors mirrored the 1993-94 trend when there was a similar surge in the number of investors buying Perth investment properties.
“These investors believe that the Perth real estate market will rise strongly in value during the coming two years whereas the Sydney and Melbourne markets will remain stagnant,” Mr Devenish said.
And this sentiment is being reflected in the local market, with recently released figures from the Real Estate Institute of WA indicating homebuyer confidence in Perth has reached a new high point in the growth cycle.
The REIWA homebuyer confidence index (HCI) recorded 87.5 per cent for the 2003 June quarter, the only time homebuyer confidence in Perth has been higher was at the peak of the housing boom.
The index is a measure of established housing sales relative to new stocks of properties for sale. In the June quarter, 87.5 per cent of new properties on the market were sold in the three-month survey period.
REIWA president Jim Henneberry said investors continued to drive the market forward while the proportion of first homebuyers continued to dwindle.
“The high level of homebuyer confidence in Perth in the June quarter corresponds with other business surveys showing rising consumer confidence generally,” he said.
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