In the past few years, Australia’s property market has seen a steady increase in the number of investors, accounting for almost 34% of new mortgage commitments. However, the question that arises for many investors is – where is the best place to invest in Australia? Should one choose the East or the West? In this post, we will delve into the current state of the property market and explore the pros and cons of investing in the East or West of Australia in 2024.

Investing in the East

The latest ABS lending indicators show that New South Wales (NSW) is receiving the bulk of investor interest, with 38% of new mortgage lending being for investment purposes. However, what is surprising is that despite having the lowest rental yields of any state and the lowest in Sydney, investors seem to be more attracted to this market. The high buy-in price and scarcity of affordable properties may not bode well for future capital gains.

Investing in the West

On the other end of the spectrum, Western Australia (WA), particularly Perth, has one of the lowest concentrations of investor activity. However, it boasts the highest gross rental yields among all the state capitals, at 4.9%, making it an attractive option for investors looking for cash flow opportunities. Additionally, with Perth home values reaching a new record high, it presents good prospects for capital gains. The entry point to the market is also more achievable, with lower median house prices compared to other major cities.

The main reason for the lack of investor demand in Perth could be due to the herd mentality of following the trend towards Sydney and Melbourne despite the unaffordability and low rental yields in those cities. Another factor could be the volatility of WA housing values during and after the mining boom, which might have made investors wary.

The Best of Both Worlds

While Sydney and Melbourne have a history of strong capital gains, their current market conditions may not be conducive to future capital growth. On the other hand, Perth and southeast Queensland present a balanced mix of both higher rental yields and potential capital gains. Moreover, both these regions have a positive growth rate of interstate migration, which aligns with purchasing demand, unlike overseas migration, which primarily drives rental demand in NSW and Victoria.

At Peel Finance Brokers, we understand that making the right investment decision can be overwhelming. That’s why our team of experienced brokers is committed to providing expert advice and tailored solutions that cater to your specific requirements. Contact us today to take the first step towards building your property investment portfolio.