If you’re looking to invest in a relatively affordable property, it’s no wonder you’re considering Perth. The property market in Perth has shown impressive stability during the pandemic and has even experienced the fastest-selling rates in over 15 years1.
Average house prices in Perth have made it one of the most affordable regions to invest in. However, you need to also consider the rate of growth before you make any commitments. In addition, you also need to know what your future buyers and tenants are looking for in a property. Recently, spacious homes away from the inner city have gained a lot of traction.
There are also some other objective ways of determining if a property is a wise investment. Consider these impartial indicators that cater to long-term ownership and favour houses over units/apartments:
- The number of residents that are in scarce skilled jobs (whose income is statistically above average).
- The median rental yield in these areas, which is linked to the point above. This affects passive income from investment properties.
- Demand for property outweighs the supply.
- Positive growth in the area, based on historical data.
- Projected improvement in the surrounding infrastructure.
Read on to see how the following 6 suburbs fare against the above criteria. In this article, the stipulated rental yields are for houses and not units.
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Sixth best to invest in
Yanchep
- Median 3 bedroom house price: 387,000 2
- Year-on-year change in the median sale price: 18.38% 3
- Rental yield: 4.5% 2
We’ve heard that location is everything when it comes to property. So at roughly 56km away from the CBD, some may think Yanchep is an underperforming market. However, with recent events, regions such as these have seen massive growth. This is because of the work-from-home trend.
The suburb offers the obvious perk of being located close to the beach as well as having more spacious homes. With the prices also being entry-level, it’s understandable why it’s become the fastest-growing suburb in the capital1.
The suburb is home to 8,869 4 people and thousands are moving there every year. 19.23% 4 of the residents live in rental accommodation and the suburb experiences a very low vacancy rate of 0.8%. 4
If you are looking to invest long term, keep in mind infrastructure projects — an upgrade to the railway line and a widening of the arterial road Marmion Avenue — will boost housing prices.
Just keep in mind that the growth of this suburb hinges on inner-city life being less desirable due to the work from home movement. However, it is undoubtedly a great choice for those that can only afford an entry-level investment property.
Pros
- Large infrastructure upgrades.
- Entry-level price point.
- The suburb fared very well during the pandemic.
Cons
- Relatively far from the CBD.
- Rental yield is high, but as a portion of the property price, it may not be significant.
Unloan Variable Home Loan (Owner)
Interest rate (p.a.)
5.99%
Comp rate^ (p.a.)
5.90%
Max LVR
80.00%
Application fee
$0.00
Monthly repayment
$2,695.08
Total repayment
$970,228.80
Highlights
- Get a rate discount every year.
- No application fees, no account fees, and no exit fees.
- Borrow up to 80% of your home’s value.
- Refinancing only.
Fifth best to invest in
South Perth
- Median 3 bedroom house price: 1,240,000 5
- Year-on-year change in the median sale price: 18.16% 6
- Rental yield: 2.0% 5
South Perth is a mere 5km from the CBD. This proximity leads to a much higher median price for properties in the suburb. However, it is still a major drawing card as the area experiences high demand. Each property receives an average of 485 5 visits per month.
In opposition to some of the list entries, this suburb might do well if the work from home movement begins to die down. If you believe the trend will shift this way, a suburb such as this one may be a worthy investment. This will likely have to be a very long-term investment if you want to see substantial growth/ROI.
South Perth has a population of 12,048 with 33.21% being tenants. Unmarried, independent youths make up the largest portion of the demographic, and the average age of residents is between 20 and 38 years 5 old. This may explain the higher percentage of tenants in the suburb. Each house spends 116 7 days on the market despite the higher than average demand in the area.
Pros
- A significant portion of the residents are tenants.
- Higher demand for rental accommodation.
- Located in the inner-city.
Cons
- Pricier than the other suburbs on the list.
- Growth hinges on the public wanting to move back to the city.
Fourth best to invest in
Como
- Median 3 bedroom house price: 820,000 8
- Year-on-year change in the median sale price: 15% 9
- Rental yield: 2.6% 8
Como is an inner-city suburb that has still experienced growth even during the pandemic. The suburb has many amenities and a very impressive schooling district. However, the largest demographic in the area are independent youths, with established singles coming in second. 8
The proximity to the CBD is an advantage as there will always be buyers that prefer not to travel for work/studies. This is the main advantage of Como, it is an inner-city suburb with relatively affordable pricing. However, there are no other indications of growth in terms of infrastructure/public transport upgrades.
There are 14,136 people in the suburb, of which 35.29% of its residents live in rental accommodation 10. The vacancy rate is slightly higher than our other list entries and sits at 1.19%. This may indicate a market that’s easier to break into, but it can also mean more competition to land tenants.
The median weekly household income sits comfortably above the western Australian average 11 despite the younger age of the residents. Looking at the trend, it is likely that the median household income will consistently grow, which is a great indicator for potential investors.
Pros
- Affordable properties located in the inner-city.
- High rental yield.
- Great local amenities and schooling district.
- A large percentage of tenants.
Cons
- No planned infrastructure upgrades.
- Lower than an average year on year increase in the median house price.
Third best to invest in
Wannanup
- Median 3 bedroom house price: 500,000 12
- Year-on-year change in the median sale price: 31.18% 13
- Rental yield: 4.1% 12
Wannanup is a suburb that has a good mix between a high increase in yearly capital gains and decent house prices. The rental yield is also above average which is good news for those planning to become landlords. For instance, a 4.1% rental yield on a 500,000 house is still higher than a 2% rental yield on a $1,000,000 house.
The suburb has a very modest population of 3,622 14 people, of which, only 16.57% 14 live in rental accommodation. The vacancy rate is a very low 0,67% 14 and there are very few properties available to rent or buy at any given time.
The area experiences relatively high demand and the largest demographic is older couples and families. The median weekly household income has consistently been lower than the western Australian average 15 and is less than the average monthly loan repayment. 13
Despite this data, the largest demographic of occupant type is mortgage holders 16 which may indicate that the residents are comfortable enough to easily make monthly mortgage/rental payments.
Wannanup has also proven to be one of the 5 suburbs in Perth that experienced the biggest growth. 13
Pros
- Entry-level property prices.
- Very high rental yield.
- High demand for property.
- Great year on year increase in the median house price.
Cons
- Very small local population.
- May be difficult to break into the market.
Unloan Variable Home Loan (Investor)
Interest rate (p.a.)
6.29%
Comp rate^ (p.a.)
6.20%
Max LVR
80.00%
Application fee
$0.00
Monthly repayment
$2,782.44
Total repayment
$1,001,678.40
Highlights
- Get a rate discount every year.
- No application fees, no account fees, and no exit fees.
- Borrow up to 80% of your home’s value.
- Refinancing only.
Second best to invest in
Rockingham
- Median 3 bedroom house price: 364,500 17
- Year-on-year change in the median sale price: 11.42% 18
- Rental yield: 4.5% 17
Rockingham is situated 45 minutes from the Perth CBD. It has a lot to offer in terms of natural landscape and scenery. The area suits the work-from-home lifestyle as it offers the tranquility of outdoor activities.
Elderly singles and older couples and families dominate the local demographic. 17 The suburb is home to 14,432 18 people, of which 28.73% 18 are tenants. The demand for property in the area is lower than other entries on the list and the average time taken to sell a house is around 147 days. 18
The weekly family income in this region is slightly lower than the West Australian average 19, but the property and rental prices are also considerably lower. This means potential tenants/buyers could still comfortably make payments long-term.
Rockingham is also one of the top 5 suburbs that experienced the highest growth in the past year1. This suburb is still much more affordable than its neighboring suburbs. At the same time, it allows new investors to acquire a larger than average first (or second) investment property. Again, this option is good for a long-term investment with the anticipation of growth over many years.
Pros
- Very affordable and suitable for first-time investors.
- Larger properties.
- Very high rental yield.
- Large population with a significant portion being tenants.
Cons
- Low year-on-year increase in the median house price.
- Needs a long term commitment.
- Far away from the CBD.
The best to invest in
Forrestfield
- Median 3 bedroom house price: 409,500 20
- Year-on-year change in the median sale price: 16.9% 21
- Rental yield: 4.7% 20
Topping our list is Forrestfield. This list entry also provides a good mix of affordability and high rental yield. However, it doesn’t have the same impressive growth as some of the other list entries. Forrestfield does have an additional perk of being closer to the CBD. Located 15km from the Perth CBD, it’s still close to a city lifestyle while maintaining its leafy suburban scenery.
The area has plans to build a local train station to connect the suburb to other transport networks, nearby cities, and the airport. 22 Improvement in public transport is always considered a strong factor in terms of property growth.
The suburb is home to 12,697 23 people of which 21.23% 23 are tenants. The region experiences a very low vacancy rate of 0.58% 23 and it takes around 93 days 23 to successfully sell a house.
Forresstfield experiences decent demand for a property when compared to the Western Australian average and the dominant demographic is older couples & families. The median weekly household income is almost on par with the WA average 24 and the majority of residents are mortgage holders. 25
Pros
- Affordable price point.
- Very high rental yield.
- Decent distance away from the CBD. Great for both city workers and work-from-home employees.
- Large infrastructure and public transport upgrades are to take place.
Cons
- Low year-on-year change in the median house price.
Final Thoughts
For first-time and experienced investors, Perth has a lot of promising and affordable options. Most of them require long-term commitment, but with the right projected growth, the payoff may be well worth the wait.
However, you can gather all the numerical data the internet can offer and that may still not be enough research. Other than impartial market indicators, you need to know if the area is prone to natural disasters or whether it has a bad reputation with the locals.
Some properties may actually be worth a substantial amount, but the reputation of the area will bring the perceived value down.
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Article sources
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