Property investor activity on the rise in mining states WA and Queensland: Knight Frank

Property investors are becoming more active in Australia’s two mining states – Western Australia and Queensland, according to a recent report by Knight Frank.

Declining numbers of properties available for sale in the Perth metro area combined with a strong rental market are bringing “high numbers” of investors back to Perth, says Neil Kay, Knight Frank’s director of residential project marketing.

He notes Real Estate Institute of Western Australia (REIWA) figures that show the number of properties in the Perth metro area available for sale has been steadily dropping over the last 10 months.

“It reached a high of circa 18,000 properties [including house, unit and land] early last year in 2011."

“However, according REIWA we are sitting at around 13,400 properties on the market, and this is decreasing every week, due to a combination of factors over the last year, such as WA has the fastest-growing population rate and lowest unemployment, highest wages, and so on,” says Kay.

He says WA now has one of the strongest rental markets, “with huge numbers of people flocking to the area for work”.

“Inner-city rents have jumped about 30%. For example a two-bedroom unit fully furnished was $600 per week 12 months ago. Over the last two weeks, we have been renting the same unit for $850 per week.”

“Supply of property for sale is dropping as owners decide to rent out their property instead of selling."

“Major oil and gas companies and all the supporting businesses and companies are opening up offices and bringing people over to work. So the rate of sales in off-the-plan apartments is increasing as the supply in established apartments tightens.”

Kay says it’s only a matter of time when all these factors combine to start putting increasing pressure on property prices to start rising.

In Queensland, investors are opting for low-rise (or “horizontal”) off-the-plan development as opposed to high-rise (or “vertical”) off-the-plan development, says Mathew Cassidy, Knight Frank’s residential property manager for project marketing.

“The reason seems to be surety around delivery of the property, meaning that the villa or house will be delivered in a time frame that suits their specific situation,” he says.

Cassidy also expects a recovery in sales volumes on the more predictable Gold Coast and Brisbane – barring any unforeseen world crisis – with rentals in both areas still strong.

“Regional mining areas have seen strong capital growth and new construction. Our regional offices note that this looks set to continue for several years at least. Occupancy rates and rental returns are flourishing due to a lack of quality accommodation and dwellings,” he says.

The strong performance of Perth’s rental market in particular – and Brisbane’s to a lesser extent – was revealed in the March quarter figures put out by the Real Estate Institute of Australia (REIA).

Perth rents for three-bedroom houses have risen 9% over the previous 12 months to a median of $425 while two-bedroom units are up 8.1% over this period to $400, according to the REIA.

Brisbane three-bedroom house rents are up 2.9% to a median of $360 for the 12 months to March while two-bedroom units are up 4.3% to $365.

Source: REIA