WA is an investor’s dream: Will it last?

Recent data from Money.com.au has outlined the massive surge in investment across Western Australia. Over the last 12 months, there has been a 37 per cent increase in investor loans across the state.

Considering the national average was growth of 11 per cent, these figures are far ahead of the rest of the country. To put it in perspective, the growth of other states was:

• NSW (13 per cent)
• Queensland (13 per cent)
• Northern Territory (12 per cent)
• South Australia (7 per cent)

Meanwhile, other parts of the country saw a drop in investor loan numbers. The ACT dropped 5 per cent and Tasmania dropped 3 per cent. Victoria was unchanged throughout the year.

So, what’s driving the immense growth across the western state? A major contributor is an influx of interstate investors. According to the data, house prices have climbed 23.8 per cent over the last 12 months in the state.

Regional towns like Dardanup and Withers have seen even higher increases, with house prices up by 26.6 per cent and 25.2 per cent, respectively.

This isn’t the only reason for the increase, however. According to Money.com.au’s research and data expert Peter Drennan, there are a variety of factors at play.

“WA is the golden goose, with the number of investor loans in the state rising by 37 per cent annually. This investor interest is fuelled by five key factors: the state’s growing population, increasing property values, strong rental demand, low vacancy rates, and the resources boom in the region,” he said.

Investor activity is thriving across the whole of Australia. Money.com.au revealed that investor loans account for 38 per cent of all new loans issued. This is up from 22 per cent in 2020.

However, the annual value of investor loans has seen a 7 per cent drop from its peak in June 2022, where it equalled $127 billion. Now, it sits at $118 billion.

Meanwhile, Western Australia saw significant growth in this period climbing from $7.8 billion in June 2022 to $11.8 billion currently, marking a 54 per cent increase.

Despite the immense growth experienced in Western Australia, we may be over the hump. Money.com.au’s home loans expert Mansour Soltani said that a lack of supply across the state is pushing investors to greener pastures like Victoria and South Australia.

“WA has seen solid growth in investor lending in the last five years, but property prices in the state are now higher than investors may be willing to pay for. It’s an inflated market and the bubble will eventually burst,” said Soltani.

Soltani outlined the pressure that inflated investment is placing on first home buyers. With demand intensifying and supply dwindling, it can create a tough market to enter.

“The competition for available housing in WA is intensifying, putting pressure on first-home buyers who now have to compete with cashed-up buyers from Melbourne and Sydney. The market is geared towards investors, not first-home buyers at this stage (we’re at the peak of the rate cycle),” said Soltani.

“There will be a continuation of demand for WA initially and SA (specifically Adelaide) as these are the last frontiers for properties under $1 million that investors are comfortable placing capital into.”

[Related: Eastern states seeing ‘seismic shift’ of investor focus]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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