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Investors the crucial piece of the market recovery puzzle

Although Perth’s property and rental markets continue to experience some of the strongest performances in years, there has been – until recently – a conspicuous lack of local investor activity.

However, recent reports from the Australian Bureau of Statistics (ABS) and other leading research firms show this is beginning to change.

The ABS reported in October that new investor loan commitments were nearing record highs and had exceeded the previous highs recorded in April 2015, with Western Australia’s investment level up 4.4 per cent.

Those with even a passing interest in the property market know strong markets require a certain proportion of investors in an active, balanced market. When a rental market is tight – as Perth’s is now – investor activity is vital to help boost the level of available properties on the market and improve critical supply levels.

Steadily rising rental rates experienced across Perth and a solidly performing local market are providing potential investors who may have been sitting on the sidelines with the confidence to once again enter the market or do so for the first time.

The now confirmed opening of WA’s hard border on February 5 next year will provide the local property market with another anticipated boost, as those overseas and interstate who may have previously been locked out are finally allowed into WA.

This comes at a critical time when governments across the country are examining housing affordability and looking at ways to tackle it.

There are estimated to be more than 1.5 million Australian households with a single investment property and about 400,000 with two, according to Morgan Stanley.

And while many may see it as out of reach, it is mum and dad homeowners who are using equity in family homes to build their nest eggs.

The rise in investor activity comes as REIWA reported a nine per cent increase in sales activity during November, up an impressive 24 per cent on the level of activity recorded in November last year.

However, despite the strong growth in the local market, we remain the most affordable capital city in the country, with units and apartments providing a crucial entry point for many first homebuyers struggling to get their foot on a continually rising property ladder.

Apartments are often the choice for those looking to buy an investment property, with apartment prices expected to rise in 2022.

Higher rental yields and ongoing low interest rates will only encourage more investors back into the local market as we head into 2022.

Historically, apartments tend to provide higher rental yields and higher depreciation, meaning better cash flow for those looking to invest in property.

While investors may not want the same things as those seeking a home or apartment of their own, the requirements are often similar.

Well-located properties, close to transport and existing amenities and infrastructure suit investors and owner-occupiers alike.

As always, do your research and speak to someone suitably qualified before making significant financial and investment decisions.

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