Perth hasn’t yet delivered growth at the same levels as other capital cities, but it’s recording price uplift at a level that would, in ‘normal’ times, be considered boom-type growth.
Perth has the most volatile market of the capital cities, a consequence of having a local economy that is strongly interlinked with Western Australia’s resources sector. While the previous resources investment boom was raging, up to 2013, Perth was a national leader when it came to housing price growth.
When the big mining cycle ended, so did Perth’s property boom and prices were in gradual decline for the next six to seven years. Many Perth suburbs have a negative 10-year capital growth average, which means property values are lower than they were a decade ago, while many others have growth averages of less than 1% a year.
The years of decline mean that the median house price for Perth is now lower than those for Hobart, Adelaide and Darwin. The days when Perth was the most expensive of the smaller capital cities are long gone. But in the current circumstances that shapes up as a positive. Perth is now one of the most affordable capital cities and buyer demand has been rising steadily over the past year or so.
The underlying economy has strengthened, the city has kept the pandemic at bay better than most and it’s attracting new settlers plus investors.
The 10 best suburbs in Perth to invest in
- Baldivis
- Balga
- Butler
- Clarkson
- Craigie
- Ellenbrook
- Gosnells
- Orelia
- Subiaco
- Wellard
The standout feature among the Top 10 picks for Perth is just how affordable the city’s market has become – and how much the market is being targeted by buyers chasing affordability.
There has been a particularly high level of support for first-home buyers in Western Australia and younger buyers have been highly active in the Perth market in the 18 months.
Investors are also starting to target Perth because its house prices are now the cheapest of all of the capital cities in Australia and it offers some of the highest rental yields – second to Darwin.
All of this is giving particular impetus to outer- and middle-ring areas that offer affordability and good growth prospects. This is reflected in the makeup of our Top 10 list for Perth.
The City of Rockingham stands out because all of its suburbs have strongly rising sales activity, with buyers attracted to bayside suburbs with affordable house prices, close to major employment zones. Sales volumes have more than doubled in the suburb of Baldivis in the past 12 months and there has been a marked uplift in the median house price to $405,000 in the latest quarter. Rents are also rising on the back of very low vacancy rates.
The nearby Kwinana LGA is also the focus of rising buyer demand as it provides the cheapest housing in the Perth metropolitan area, as well as good infrastructure and proximity to employment zones. Sales activity has trebled in the suburb of Orelia, while rents have risen strongly on the back of vacancies around 0.5% and rental yields are around 6%. Prices have risen 7% in the latest quarter, but the median price remains low at $265,000.
With a median house price of $410,000, neighbouring Wellard is more expensive but has similar parameters – vacancies are ultra low, rents are rising, sales activity has more than doubled in the past year and prices have risen strongly in the latest quarter.
The Gosnells LGA is another affordable precinct in Perth and the suburb of Gosnells has recorded sales at more than double the rate of a year ago. There has been double-digit growth in the median price, but it remains affordable at $300,000. Low vacancies are also pushing up rental levels.
The City of Wanneroo in the far north is one of the leading population growth precincts in Western Australia, with new suburbs being created to cope with home-buyer demand. Butler, which has benefited from the extension of rail links recently, has recorded a steady uplift in sales activity over the past 12 to 18 months, with a consequent response in prices. Very low vacancies are pushing up rents in this area also. Nearby Clarkson has a similar scenario unfolding and investors can expect yields above 5%.
The Joondalup town centre is the CBD for the northern suburbs of Perth, providing an array of infrastructure and amenities, including university, hospital and transport interchange services. Nearby suburbs always attract steady demand and Craigie has seen sales activity double in the past 12 months, with prices now rising strongly.
Closer to the Perth CBD, in the middle-ring LGA of Stirling, Balga has experienced a steady uplift in sales activity which is starting to impact prices. Rents are also rising in a market where vacancies are well below 1%. Balga is attracting buyer demand because it offers affordability as well as an array of education infrastructure.
Ellenbrook is a key suburb in the Swan LGA in the north-eastern precinct of Perth. It offers investors rising rents and yields above 5%, as well as sales activity which is double the levels of a year ago, putting upward pressure on prices.
In the more expensive areas of Perth, Subiaco (median price $1,250,000) has experienced a major surge in buyer demand and prices are trending higher. It’s also popular with renters and a vacancy rate of 1.5% is putting pressure on rents.
The 10 best suburbs in Perth to invest in
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| Suburb | Median house price | 1-yr growth | 10-yr average annual growth (%pa) |
Vacancy rate | Median rental yield |
|---|---|---|---|---|---|
| Baldivis | $405,000 | 9.8% | -0.6% | 0.6% | 5.0% |
| Balga | $320,000 | 7.6% | -0.8% | 0.6% | 5.1% |
| Butler | $380,000 | 11.8% | -0.6% | 0.3% | 4.8% |
| Clarkson | $380,000 | 8.6% | -0.2% | 0.4% | 5.3% |
| Craigie | $465,000 | 16.4% | 1.4% | 0.6% | 4.7% |
| Ellenbrook | $375,000 | 10.9% | -0.4% | 0.8% | 5.3% |
| Gosnells | $300,000 | 11.6% | -0.3% | 0.4% | 5.4% |
| Orelia | $265,000 | 11.3% | -0.7% | 0.5% | 6.1% |
| Subiaco | $1,250,000 | 8.7% | 0.6% | 1.5% | 3.2% |
| Wellard | $410,000 | 15.7% | 0.4% | 0.4% | 4.7% |
Sources: Median price, growth and rental yield: CoreLogic data sourced from yourinvestmentpropertymag.com.au dated 1 August 2021. Vacancy rates: SQM Research as at September 2021.
Cover image source: Bruce Aspley/Shutterstock.com
About Terry Ryder
About Terry is the founder and Managing Director of hotspotting.com.au, which he created in 2006 to help investors find the best places to buy. Terry has been a specialist researcher and writer on Australian residential property in a career spanning four decades. During that time he has published four books.
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