Is property development in Perth a good idea?

Is now a good time for developing property in Perth ?

Updated: March 28, 2023

perth property development on the swan river

Most people in Australia, including you, probably have some financial interest in property, and for good reason. It is a tried and tested place to invest your money, grow your wealth and achieve financial freedom. Property is statistically a far safe place to have money than the stock market on along running average, and typically rides out the storm much better than stocks in times of economic crisis or instability. In uncertain times like these, it is very important to make informed decisions about where and why you are choosing to invest in and develop property in Australia. If you make the wrong property investment and development decision at the moment, you will lose a lot of money. On this section of the website, you will learn why Perth is a going to be the best place within Australia to invest in and develop property in Australia for the foreseeable future.

The majority of Australians are familiar with the phrase “safe as houses” meaning many have a significant proportion of their wealth tied up in property. This is either in the family home, investment properties or through superannuation funds. In fact, the enormous total book value of Australian Property means Australians are regularly listed in the top 3 countries for wealth per capita.​ Most Australians look at property as a long term wealth accumulation strategy, relying on capital growth through a buy and hold model.

To begin with, growth in the property market for each major capital city is cyclical, with most capital cities in Australia experiencing 7-10 years of growth followed by 5-10 years of market retraction. You need to know where in the cycle your capital city is in its growth cycle; it is either in a growth phase headed to a peak, or its at a peak about to head into a value contraction phase to a bottom (loss of value). If you get the timing wrong of when and where you enter the market, you risk loosing money by buying at the wrong moment in the cycle.

All major east coast capital cities (Sydney, Melbourne, Brisbane) are now in the value downturn phase of the cycle after many years of sustained growth. These cities will continue to fall in vlaue through 2023 as affordability, cost of living, sharp interest rates rises and unit oversupply become major issues.

Perth however will continue coming out of the bottom of a downward cycle after its near ten year slump, being in consistent positive growth territory since november 2019. The remaining 3 months of 2022 may see slight contraction in the housing market as consumer sentiment cools temporariliy. even in the face of rising living costs and interest rates, WA will reach undersupply of some 20,000 units by 2023 as imigration picks up and rents soar; vlaues and demand for housing will have a second wind here as demand outstrips supply .

It is poised to continue an upward phase of growth in the coming years ( having done approx 18% in the 12 months to july 2022). Perth should recover from any small falls and accelerate into sustained mid and long term growth driven by;

  • strong opportunites for overseas migration intake to sustain housing demand- 160 000 migrants are coming to Australia in 2022, with higher targets for years to follow to fill crippling skilled labour shortages
  • strong domestic demand for product off the back of high living costs and falling eastern states home values juxtaposed against exceptional affordability in WA ( Median price for housing in WA approx 550k),
  • a strong, diversified and resurgent resources driven state economy (security of supply for asian and global markets),
  • huge latent buyer demand with chronic undersupply of current and forecast housing stock levels (less than 6 months supply on market) with a now reopened border and ample job opportunities.
  • increase in interstate migration to fill the growing needs of an undersupplied labour market.

Property development, a complimentary strategy.

Property Development is a versatile and complimentary strategy to simply investing (buying and holding) property in Australia. You can make money by developing property in the short term at most points in the market cycle. Whilst it is great to be developing in a rising market, you dont necessarily need to rely on on capital growth to create equity uplift, because you are value adding in other ways.If you focus on getting the timing right however, you can add value through development and compound the returns by letting the market do some heavy lifting at the same time (capital growth in a rising market)- which is where we are at in WA!

This is what makes the prospect of getting into property development in Perth at the moment so exciting. Perth is the only capital city in Australia currently coming out of bottom of its cycle, and strongly too. We have just entered the upswing part of our cyclical growth phase. And its never been more affordable and statistically attractive to enter the WA market . The trick then is getting into a market at the bottom of the growth cycle, and developing and selling as the market is heading to a peak in a rising market. Now is the time to get in and prepare to ride that wave.

​There has never been a better time from a buy value perspective in Perth . All the correct indicators exist showing the start of the next phase of growth in the state:

  • Surge in land and housing demand forecast by experts off the back of interstate and overseas migration with the WA state border now open
  • Latent undersupply (10 years of poor dwelling commencements and land releases) meaning lagging supply and demand that is about to explode.We are well behind our infill and dwelling commencement targets, lagging 10-20% behind required commencement rate at current migration levels
  • New resources projects in the mid-west and north-west driving unmet labour demand and wages to levels higher than the last mining boom, with mining now accounting for a record breaking 49% of state GDP.
  • Supply is well outstripped by demand (undersupply in land, housing and units) reflected in 15% increase in price over 2020- 2021 and 16% increase in rent. Rental vacancy rate has fallen sharply to just over 6000 listings, less than half of what is required for a balanced market.
  • 160 000 migrants in federal government intake for 2022, just 10% of those would consume all the supply in the WA market, meaning continued upwards pressure on house prices
  • Most affordable capital in Australia at just under 550k median price (attractive to broad range of local, investor and migrant buyer base.
  • Good medium and future employment prospects, with the second lowest unemployment rates in the country.
  • second highest migration rate as at august 2022 behind Queensland

​It is a perfect time to get a property development planning started in Western Australia. The state is currently headed for a population increase to meet labour skills shortages, an under-supply of housing in key growth areas, and provides exceptional value for money for property acquisition. This is the opportune environment for a savvy property developer to thrive.

Let us help you make the most of property development in Western Australia.

Before committing to doing a development in Perth, many of our customers started by learning the specifics of how to become a successful property developer from us so they dont make mistakes. Spending a bit of time getting the right information, education and guidance from us has given them the developer know-how they needed to make informed decisions about successfully investing and developing in Perth. Developing is slightly different from state to state, and understanding when and where to buy is something you dont want to get wrong, particularly if you are new to the whole process. Learn how to work with us today to help you with the next step in your property development journey!

Let us help streamline the process for you.

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Anton Flynn

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