Power duo: Why Perth and Brisbane are fertile ground for investors

In the slowing national property market, experts say the best buys for investors could be in Perth and Brisbane, with both experiencing strong population growth and supply shortages.

At the country’s biggest bank, economists are tipping these to outperform the other capital cities, despite house price growth weakening nationally.

“Over the past six years, population growth in Western Australia has outpaced new dwelling supply by about 9 per cent,” says Commonwealth Bank senior economist Trent Saunders. “In Brisbane, it has outstripped new supply by around 3.5 per cent.

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“In contrast, NSW and Victoria have seen new housing supply outpace population growth over that same period. So we expect the tighter supply-demand conditions in these markets will see them avoid some of the larger price declines we’ve seen in Sydney and Melbourne.”

The latest Domain House Price Report shows house prices in Sydney fell by 3.3 per cent, and in Melbourne by 3.1 per cent, in the June quarter, while in Perth they rose by 1 per cent, bringing the year’s rise to 22.5 per cent, and in Brisbane by 0.4 per cent, and 16.4 per cent year-on-year.

Rents also jumped 7.1 per cent in Perth and by 7.7 per cent in Brisbane over the past year, according to the latest Domain Rent Report, similar to Sydney’s 7.6 per cent and well above Melbourne’s 1.7 per cent.

Another plus for investors in Perth is the state government’s talk about zoning changes.

“So instead of the minimum for a subdivision being 900 square metres, it could be brought down to 700 square metres,” says Abdullah Nouh, the founder of Mecca Property Group. “That could increase density as it gives the ability to increase townhouses, which means the underlying value of land goes up.

“Perth is also benefiting from a very strong economy with a lot of employment.

“Brisbane has a lot of infrastructure work that hasn’t yet started, so that’s a lot of jobs, and there’s strong migration – the population of Brisbane has gone up 14 per cent since 2020 – and limited stock.”

Even though unit prices have both skyrocketed in Perth and Brisbane over the past year, by 23.9 per cent and 15.4 per cent respectively, yields are still good, at 5.31 per cent for Perth and 4.26 per cent for Brisbane, on Domain figures. For houses, they’re 4.15 per cent and 3.53 per cent, respectively.

Propertybuyer chief executive Rich Harvey is another who rates Perth and Brisbane. After languishing for the past eight to 10 years, Perth’s property prices are now playing catch-up with the other capital cities, he believes, and Brisbane is unlikely to lose its shine with interstate migrants.

“Perth is very much driven by the resources sector which underpins its economy and will continue to do so,” Harvey says. “We won’t continue to see double-digit growth, but we still see it in high single figures.

“And I see Brisbane as even more sustainable than Perth. People used to go there for its prices, but now they go for lifestyle, and there’s massive infrastructure coming in for the Olympics. We see prices rising by 9 to 10 per cent over the next 12 months.”