Population growth and limited new builds drive investor interest in Western Australia’s capital
Perth’s residential apartment sector is experiencing heightened demand as population growth outpaces new housing supply, according to recent industry data.
The city, located over 3,000 kilometres from Sydney, has historically attracted less attention from investors in Australia’s eastern states. However, tightening affordability in other markets and Perth’s relative value are prompting renewed interest, particularly in apartments.
A recent report from the National Housing Supply and Affordability Council (NHSAC) revealed that approvals for higher-density dwellings in Perth dropped to approximately 67,000 in the year to February, nearly half the peak of 123,000 recorded in August 2016. The report also noted that, for the first time in recent years, developer costs in 2023 surpassed expected sales prices, leading to a slowdown in apartment construction and a shortage of available units.
The NHSAC forecasts that new supply of higher-density housing in Perth will remain limited until at least 2029, with a significant increase in apartment construction not expected until the latter part of this period.
Rental yields for Perth apartments are currently outpacing those in the eastern states. Data from the Real Estate Institute of Western Australia (REIWA) shows units delivered yields of 6.2% in the year to March, compared to 4.5% for houses. Over the past five years, apartment rents have increased by 82.9%.
Ronald Chan (pictured right), chief executive of apartment developer Finbar Group, said the current market conditions highlight the advantages of apartment investment, including lower entry costs, higher rental yields, and reduced maintenance expenses.
“Apartments can be particularly attractive for investors looking to maximise cash flow or enter the market sooner, plus external upkeep and shared facilities are managed by the strata offering both convenience and cost efficiency,” Chan said. “They’re ideal for hands-off investing.”
He also pointed to tax benefits for investors purchasing new apartments, who can claim depreciation on new fixtures, fittings, and shared areas. He noted that Finbar has seen sustained demand for its developments from both investors and owner-occupiers.
“Demand has remained consistently strong, which speaks to the ongoing appeal of well-located, well-designed apartments in a market facing significant supply constraints,” Chan said.
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