Where property investors are looking to buy

‘Isolation’ may be a concept we’re all very much over after more than two years of practise, but it appears property investors are increasingly interested in buying in the most isolated city in the world.

Investor property enquiries have doubled in some parts of Perth. Picture: Getty.

Investor activity is strong with more money borrowed for investment properties in recent months than any other time on record.

In February, the Australian Bureau of Statistics said $10.8 billion worth of investor loans were issued during the month, slightly lower than January’s record high. This was the first fall in investor lending since October 2020.

Record low interest rates have driven housing prices to record highs in many parts of the country, providing homeowners and investors with healthy levels of equity to put towards a new property.

So, where are these investors looking for their next purchase?

Analysis of email enquiry for properties listed on realestate.com.au has revealed the regions with the largest increase in activity over the past year, with a big surge in demand for homes in Perth.

Of the top 10 capital city areas identified as seeing the largest growth in investor enquiries nationwide, six were located in the Perth or the neighbouring Peel region.

Investors go west

Investor enquiry activity in Perth’s south east region more than doubled over the 12 months to March 2022.

This region takes in the more affluent central suburbs like South Perth and Victoria Park, across to leafy Kalamunda in the eastern hills and down through to Armadale and Serpentine in the south.

Perth’s north east, inner city, south west and north west regions also featured in the top 10 – so that’s every region in the metropolitan area.

Mandurah, just south of Perth, came in at number 10.

Snjezana van de Graaf, Director of Perth-based Property Buyers Services says her workload has quadrupled since 2020.

“In the perception of investors [Perth] is good value,” Ms van de Graaf said.

“It’s cheap and right now we have complete recovery of rental values, a very tight rental market.”

And it appears investors from around the country are taking notice, Ms van de Graaf says most of her investor clients are coming from interstate.

“Sydney-siders are the most active,” she said. “Sydney-siders are taking the lead because their market has so much equity.”

Ms van de Graaf says she’s also experiencing an increase in clients from Queensland and Tasmania, both states experiencing some of the strongest house price growth in the country.

Higher price points have pushed investors to look for value outside the major capital cities. Picture: Getty.

She believes investors are looking to get the most value out of their equity, and investing in most other capital cities is too expensive.

Ms van de Graaf says she’s also noticed a change in buyer habits as a result of that increase in equity.

“They are buying investment properties that are a million dollars plus,” she said.

“In the past, in a sluggish market, the investors are trying to keep around the median price or even under, now these investors are having a million dollars or more to spend.”

PropTrack’s Home Price Index report revealed the average house price in Perth grew less than 8% between March 2021 and March 2022, that’s the weakest state capital market.

The median property price is now $520,000.

Perth’s south east region, the metropolitan area gaining the biggest increase in investor interest, isn’t close to the city’s famous beaches, but it is home to two of the state’s top performing government schools, and Ms van de Graaf says that’s driving investment in that region.

“Investors want to be in that place because the whole area appreciates because of good schools,” she said.

“Those who are more interested in capital appreciation and less so in yield would go for expensive areas like Willetton, they’ll claim their negative gearing but they would live with that because they are looking at capital growth.”

The median rent in Perth’s South East is $420 per week, and the median rental yield is 5.08%.

Regions dominate investor interest

Property price growth in regional areas has been stronger than most capital cities over the past 12 months.

So it’s perhaps no surprise the increase in investor enquiries was also strongest for the regions.

South Australia’s Outback region, which takes in most of the state north of the Murray River, saw a whopping 197% increase in investor enquiries in March this year compared to last year.

PropTrack data shows regional South Australia experienced the strongest property price growth of all regional areas last month, up 1.03%.

The median rental yield for the region is 7.21%, which is higher than any of the top ranking metropolitan regions.

In total, four regional areas saw an annual increase in investor enquiries of more than 100% in March.

Queensland’s Outback region, which takes in the state’s western border, the tip of Cape York in the north and the New South Wales border in the south, saw a 129% increase.

More investors are looking at properties in regional parts of Queensland. Picture: realestate.com.au

And the bordering Mackay, Isaac and Whitsunday region saw a 120% increase in investor enquiries.

The median rent there is $400 a week with a median rental yield of 6.58%.

WA’s Wheat Belt region, which also takes in the coastal towns of Albany in the south and Jurien Bay in the north, saw investor enquiries increase around 102%.