Perth property market has highest growth potential
In a vote of confidence, property investors are backing Perth as the property market with the strongest outlook, according to an annual survey from property investment consultancy Momentum Wealth.
The survey collected 401 responses from property investors across Australia, with 37 per cent of respondents outlining the capital city market as the best place to invest in the next 12 months, and an overwhelming 61 per cent ranking Perth as the market with the highest growth potential in the next three years.
Momentum Wealth Buyer’s Agent Team Leader Emma Everett said a combination of affordability, improving rental conditions and positive future indicators were likely behind the uplift in confidence in Western Australia’s property market.
“Continued improvements in rental conditions and a significant tightening of stock in Perth’s housing sector are now driving the consensus that the property market is moving into recovery phase, with savvy investors realising the counter-cyclical opportunities at hand,” she said.
“At the same time, longer-term indicators such as rising activity in the mining sector, increased infrastructure spending and early signs of accelerated population growth in Perth are providing healthy indicators for the market’s future performance, with the latter expected to drive higher levels of demand in the medium term.”
While Perth and Brisbane emerged as the leading choice for overall respondents, the survey showed confidence had risen as a whole across Australia’s property markets.
Ms Everett said the uplift in sentiment was likely due to shifts in Australia’s different property cycles, but advised investors to remain diligent in their investment decisions.
While sentiment was optimistic across Australia’s property markets, the survey showed finance remained a barrier to entry for a large proportion of buyers.
This was especially the case in Perth, where 39 per cent of investors highlighted lack of equity or borrowing issues as factors preventing them from entering the market in the shorter-term.
Momentum Wealth’s Finance Team Leader Caylum Merrick said investors unable to progress with their portfolio should focus on debt consolidation strategies.
“While recent interest rate cuts and improving rental conditions are helping to alleviate some of these financial pressures, investors who are lacking the equity to progress should focus on debt consolidation strategies, as well as reviewing their existing lending solutions for potential opportunities to reduce repayments,” he said.
Mr Merrick said this combined with complexities in Australia’s lending environment could also be behind the growing popularity of mortgage brokers.
At 68 per cent, the vast majority of investors surveyed said they would engage a mortgage broker to secure their next investment loan over other lending options, with only 19 per cent indicating they would approach their bank directly.
Mair Property Funds Managing Director David Ellwood said investors were recognising the benefits of commercial property over other cash flow-focused investments.
“With the low interest rate environment pushing returns on interest bearing investments such as government bonds and term deposits below two per cent, yield-focused investors are looking towards alternative income-generating options, and commercial property is presenting an attractive alternative,” he said.
“Combined with the high entry cost of investing in commercial properties directly, this could explain growing interest in commercial property fund.”