_The number one reason to invest in Perth - High ranking liveability
1) High ranking liveability
Perth places high for liveability when measured against other cities around the world. In 2018, the Economist’s Intelligence Unit ranked Perth in 12th position from 140 global cities based on stability, infrastructure, education, health care and environment. Mercer placed Perth in equal 21st position, with Montreal, from 231 cities in their Quality of Life index 2019. At the last Census, the ABS ranked Perth’s Cottesloe and Peppermint Grove in the top five Australian advantaged local government areas according to the relative socio-economic conditions of people and households.
2) Government investment
After a period of protracted decline, WA’s domestic economy (GSP) which includes exports, is projected to grow to 2.5% in 2017-18 and 3.3% in 2018-19 according to the WA State Budget, following the first annual contraction on record (-2.7%) in 2016-17. The major short term drivers being the export of LNG, iron ore, gold and lithium; while the medium term drivers are household consumption on the back of improving consumer confidence, population growth and a strengthened labour market. The Government is spending $4.2 billion to build new road infrastructure across the metropolitan area and regional WA.
3) Wealth flows
The number of high-net-worth individuals (HNWIs) in Perth continues to rise. According to GlobalData WealthInsight, the number of HNWIs – those with a net worth of more than US$1 million, excluding their primary residence – is expected to grow by 22% from 2018 to 2023, to reach a total of 42,100 in Perth. Over the past five years two millionaires were created every day in Perth, this is expected to rise to four millionaires per day over the next five years. In 2018, the number of ultra-high-net-worth individuals (UHNWIs) grew by 4%, to 318, and projected to rise another 21% over the next five years.
4) On the itinerary for international visitors
Perth is the closest major Australian capital city to Asia, allowing easy connection to the European continent, and falls into the same time zone as capital cities such as Singapore, Hong Kong, Kuala Lumpur, Jakarta, Beijing and Shanghai. International departure capacity at Perth Airport expanded by 24.7% between 2012 and 2017 as reported by OAG Schedules Analyser. Each year since 2012, Tourism Australia has calculated international visitors to Perth has grown on average by 5.1%. This is expected to grow further now Qantas has raised the benchmark to become the first direct airline operating a regular passenger service between Perth and London Heathrow—the second longest flight in the world at 14,498km.
5) Growth in international students
The number of international students enrolled to study in higher education facilities in WA grew 7.2% in the quarter ending December 2018 according to the Department of Education and Training. Higher Education students grew 4.6% while school-aged international students rose 4.6%. The SSVF has made the process of applying for a student visa in Australia easier to navigate. While more recently, the WA Government released a new pathway for permanent residency via the Graduate Occupation List (GOL). It’s designed for students who have studied for at least two years at a WA university and have a full-time job offer for more than 12 months (from the GOL) and can prove ‘proficient English’.
6) Relative mainstream value to other major capital cities
Perth houses and apartments are relatively well placed for value in Australia. The median value for an apartment in March 2019 was $347,600 in Perth, whilst Sydney was $696,900, and Melbourne $466,900 according to APM. This was similar for houses in Perth with the median value being $530,000; significantly lower than Sydney ($1.03 million) and Melbourne ($809,500). Those now priced out of the these Australian East Coast cities have Perth back on their radar.
7) Rental yields rebounding
Perth’s gross rental yields have rebounded to grow 40 bps over the year ending March 2019 to stand at a median 4.90% for apartments, and up 10 bps to 4.40% for houses. Over the past five years, Perth has recorded an average rental yield of 4.68% for apartments—outstripping the national average of 4.45%. Perth houses, at 4.33%, was closer to the 4.39% national average over this time.
8) Lowered vacancy
Total vacancy has lowered to 2.5% at the end of March 2019, as reported by REIWA. Over the medium term, as the population grows, less apartments are built and the economy strengthens, additional apartments will be required to meet the changing demand for low maintenance, high-density living. Lifting the share of this type of product in Perth closer to the national average, will sustain the maturing global city.
9) Rise in signed residential tenancy agreements
Across Perth, signed residential rental agreements in Q1 2019 increased by 131%, compared to Q1 2018, for the Knight Frank Residential Property Management team.
More people are moving from interstate and signing rental agreements with an increase recorded from 14% of all leases in Q1 2018, to 19% of all leases in Q1 2019. Tenants signing new leases worked in two main sectors being ‘resources’, growing from a 17% share in Q1 2018, to 31% in Q1 2019, and ‘finance’, up from 10%, to 13%, in the same period.
10) Relative prime value to other global cities
Perth prime property prices grew 1.8% in the year ending March 2019 as wealth creation continues. Knight Frank considers prime property to be the most desirable and most expensive property in a given location, generally defined as the top 5% of each market by value. The other factor to consider is the global value proposition. In Perth, at the end of 2018, US$1m could buy 117 sqm of prime property, compared to 52 sqm in Sydney, while in Monaco, only 16 sqm could be purchased. At the same time, 22 sqm in Hong Kong and 31 sqm in both London and New York.