Brexit could have a silver lining for WA property
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Jun 28, 2016
Brexit could have a silver lining for WA property
Property investors are the most influenced by negative global sentiment and the lower level of property investment ownership in WA will leave the State less exposed to any negative impact following the UK’s decision to leave the European Union last week.
The lower level of properties owned by investors in Western Australia compared to other States could prove to be a bonus following uncertainty in the global economy as a result of Brexit.
Core Logic figures reveal that only 23.2% of properties in WA were owned by investor compared to 30.5% in Victoria, 28.5% in Queensland and 26.3% in New South Wales.
Property investors are the most influenced by negative global sentiment and the lower level of property investment ownership in WA will leave the State less exposed to any negative impact following the UK’s decision to leave the European Union last week.
In contrast, property investment activity has been very strong in areas such as Victoria and New South Wales over the past three years and this has resulted in surging property prices in Melbourne and Sydney.
Many of these investors in Sydney and Melbourne have been from overseas where in Perth very few international property investors have been active in recent years.
The most exposed sector to any international negative repercussions will be the apartment market where investors own 57.8% of units in Victoria and 49.6% of units in New South Wales.
In contrast, investors only own 29.6% of units in Western Australia.
Indeed a silver lining of the global uncertainty is the Western Australian property market may benefit from investor uncertainty in the Eastern States who may now decide it is a good time to invest in WA.
Currently, rental yields in Perth higher than Sydney and Melbourne while property prices are much lower.
The reality is that Melbourne and Sydney now have the lowest rental yields in Australia and this may have an adverse impact on investor activity on these two capital city markets moving forward.
In contrast, the recent spike in new housing construction in Perth appears to have ended and the decline in new home construction will mean that rental yields should gradually increase making Perth an even more attractive location for investors throughout Australia to purchase a property during a period of international uncertainty.
