Bustling with people and bathed in a sunny hue, Perth is a beautiful city on the west coast that offers the best business and pleasure opportunities. However, it has recently become popular for its luxury property segment that was a non-existent feature only a decade ago. It has experienced the strongest growth in the sector and outpaced all the other major cities. The surprising change has led to a rise in the price of luxury real estate as the demand for premium homes has soared.
The market performance of high-end residential properties in Australia displayed a paradigm shift last year, with smaller cities moving ahead. Among these, the capital of Western Australia ranked highest in terms of price growth. Offering scenic locales and a formidable skyline similar to that of Sydney, the city has come a long way and is all set to become the new settlement destination for the ultra-rich population. Here is why it is leading the way.
Prime Property Sector Showcasing A Boom
Although the country was struck by the pandemic, the high-net-worth individuals did not take a back seat when it came to making investments. The wealthy families became cash-rich because of the minimal spending and travelling during the year and they wisely utilised it for grabbing trophy homes. A majority of the demand has been coming from interstate buyers who want affordable and spacious opulent houses in safer zones. Since Sydney and Melbourne were the worst-affected spots in Australia, other metropolitan regions took up the spotlight. Perth has emerged as the top-ranking Australian city in the list of global prime residential prices showcasing the highest growth of 3.6%.
It is interesting to note that Perth had the second-lowest price growth in 2020. However, it is primed for massive growth this year and the house prices are expected to grow by 9%-12% while the unit prices will go up by 5%-7%. Similarly, the house prices in Sydney and Brisbane will witness a growth of 7%-10%. On the other hand, Melbourne is predicted to make a slow recovery with only a 3%-5% rise in dwelling prices.
The Reasons for the Rebound
According to experts, the spiralling population in the city and the splendid performance of the economy have helped in driving the growth of house prices. The migration of affluent communities from other states of Australia like Sydney and Melbourne has led to population growth. Most of these people are looking for safer environs that promise a world-class lifestyle and extravagant living. The capital city extends the advantage of being one of the best places to live and own a luxury property in Australia.
Other reasons for the upswing include the incentives provided by the Federal Government, which have given a much-needed impetus to the sector. The construction has been propped up by the HomeBuilder and the state support packages that have also improved the supply in the housing sector. The rental yield has made marked progress, which promises a significant return on investment for people who are looking for a steady income from their purchase. The vacancy rate is lower than 1%, which ensures that the rental yield will be even better in 2021.
Various ex-pat investors and local buyers who were forced to invest locally have added to the soaring demand. Most of the super-rich individuals have been expanding their portfolios by purchasing luxury real estate down under. The major contributor to this change is that Perth has been the least affected city during the pandemic as compared to other states.
The Third Quarter Took the Prize
It is astounding how the story changed for the city in a few months. The bullish stock market was one of the reasons for the well-off community to look for options within the country along with the low-interest rates. The third quarter proved to be a turning point when the prices started going up and the fourth quarter fared even better. Many property experts feel that after the population is vaccinated, the growth will be even higher. The current median house price in the city stands at $672,000, and the unit price is at $385,000.
According to the Real Estate Institute of Western Australia, the home value index for the city took a leap of 1.6% in January this year, which was 3.8% higher than what it was three months ago. The jump has made it the fastest rise in the housing sector across the country. The excellent last quarter has boosted the confidence of local buyers who are more than willing to own a premium property in the metropolis. The A-grade abodes are selling like hotcakes and the transactions are getting completed faster than expected. The situation is favourable for buyers who are splurging on lavish homes in the range of $5-$30 million.
Lifestyle Properties Take the Cake
The COVID-19 pandemic has made the buyers look at the homes that offer ample space, beautiful surroundings, creature comforts, scenic views, and protection in the virus-ridden world. With few cases reported in Perth, the destination has become highly sought-after among house hunters. Also, the presence of waterfront residences in the region makes it all the more attractive. The suburbs close to the beach have been performing well in the wake of the boom in the sector. One such region is Cottesloe, which has a median house price of $1.95 million at present. The suburb boasts of white sand and beachfront restaurants that offer the best living experience in the visually appealing hinterland.
In addition, the abundance of space available in Perth homes is an exciting proposition for people who are spending now more time indoors because of the contagion. The cost-effectiveness extended by the properties are yet another factor that makes them a preferred choice in comparison to the beachfront homes in Sydney. The secluded land has been prospering with robust commodity prices, recovery of lost jobs and a booming economy despite the pandemic. With more people planning to work and enjoy in the comfort of their grandiose homes, the property market has been experiencing strong growth.
The luxury property market has grown from strength to strength in the past quarters in the city and is all set to skyrocket. If you are planning to invest in luxury real estate in Perth, this is the best time to bask in the glory of the boom.