Western Australia Experiences Record-High Property Investor Lending

March 2024 saw Western Australia’s property investor lending reach a peak of $1.050 billion, marking the highest monthly fgure in 17 years, according to Kevin Young, President of Property Club. This milestone last occurred in July 2007 when lending fgures hit $1.055 billion, emphasizing a signifcant resurgence in the state’s real estate investment activity.

Key Drivers of Growth: The spike in investor lending over the past three years is attributed to growing confdence in WA’s property market, fuelled by rising house prices and high rental yields. This optimism has been bolstered by a substantial 35% increase in weekly rents and a $100,000 rise in median house prices in Perth over the last two years. However, recent stabilization in rent increases and signs of moderating rental growth rates suggest a shift in market dynamics.

Future Market

Predictions: Despite current growth, Property Club forecasts a cooling period. It is expected that the full impact of new rental properties, spurred by recent investments, will materialize in the latter half of 2025, potentially leading to peaked rents and a subsequent decline in some oversupplied areas. This anticipated softening in the rental market may also affect established sales markets, as weakening rental markets often precede declines in property values.

Historical Accuracy and Investment

Caution: Property Club, with nearly three decades of experience in Perth, has successfully predicted previous property boom cycles. In 2015, amidst a weakening rental market, the organization accurately forecasted a drop in median home prices below $500,000, a prediction that materialized following a peak in December 2014. Given the current market conditions, Property Club advises investors, especially those from interstate with limited local market knowledge, to conduct thorough research before purchasing properties in Perth. The recent infux has drawn comparisons to a modern-day gold rush, with Eastern states buyers particularly eager, often foregoing essential safeguards like building inspections in their rush to secure investments.

Advisory for Investors: Property Club has issued a warning to potential investors about the risks of impulsive buying in the current volatile market. The emphasis is on selecting properties that promise sustainable long-term growth rather than making hasty decisions that could lead to fnancial losses.

In summary, while the surge in property investment lending in WA refects a robust market, Property Club stresses the importance of cautious investment strategies based on comprehensive research to navigate potential future market adjustments effectively.