Are Eastern States buyers snapping up WA properties?

I’ve been asked about Eastern States buyers a lot lately – are they buying up a lot of property in WA and should we be concerned?

To answer the first part of the question, yes, WA and Perth have caught the eye of Eastern States investors. It’s something REIWA has been talking about for some time.

They’re drawn by the value our market offers. Despite increases over the past few years, our property prices are much more affordable than the east coast and we’ve had significant rent price growth. This means properties have the potential for very good yields.

For the rental market Eastern States interest is a good thing. The shortage of rental properties in WA combined with high demand is keeping vacancy rates low and putting constant upward pressure on prices. We need every rental property we can get.

From a buyers’ perspective it does mean there is greater competition for homes in some areas. Eastern States investors are predominantly drawn to suburbs with lower median prices where rents have shown strong increases. Our members are reporting strong interest in parts of the south-eastern and south-western corridors of Perth. There is also interest in the regions, such as parts of Bunbury.

However, competition in the market is high, regardless of Eastern States interest. Low building completions and the challenges in the rental market are driving potential home owners to the established homes market.

And as well as local demand, we have demand from new arrivals to our state. Our population grew 3.1 per cent in the year to June 2023, including 73,000 people moving to WA. That’s about 30,000 new households needing a place to live.

WA is the current hotspot for Eastern States investors and what we need to understand is that this will pass. When yields become less attractive they will move on to the next big thing. This is already happening in sections of our market; with some of our members noting rising house prices have reduced yields and interest has fallen.

Supply, not east coast investors, is the greatest challenge facing the market. What is concerning is WA’s low level of building completions. About 14,000 new homes were completed in each of the last three financial years and the Housing Industry Forecast Group is only expecting 15,000-16,000 this financial year.

That is not enough to meet the needs of our growing population.

The WA government is well aware of the situation and has put a range of initiatives in place to address the problem, but it will take time.

In the meantime, it’s a stressful situation and I urge people to be patient. If you’re looking for a home, work with real estate agents and property managers. And above all, be kind to each other.

Joe White
REIWA President