WA vs NSW – A tale of two states!
Speak with a WA residential sales agent in 2023 and you will likely hear that they have recently sold to an east coast buyer or sold to a Buyer’s Agent representing an east coast buyer. A major shift of wealth has come from the east coast to the west in 2022 and 2023. This is resulting in rising property values here in WA and properties being bought by interstate investors rather than local owner occupiers.
Having grown up in NSW I am very familiar with the NSW real estate machine. As an owner of NSW and WA property, I get to experience the systems and the factors that affect buying and selling in both states first-hand. Coupled with 15 years’ selling experience as a Perth real estate agent, this puts me in a unique position to compare the two states and more specifically the Perth Metropolitan and Sydney Metropolitan markets.
On the surface it is simple to assume that the real estate systems, legislation, buying behaviour and selling attitudes would be similar across both states, but they really are quite different. The methods and the motivations of the players have been far apart for many years. Slowly but surely, they seem to be edging closer together.
Before we look at the differences between the two states let’s examine why there has been a recent interest in WA property from NSW buyers. The answer is affordability and returns for most, and lifestyle and opportunities for others. Key facts and figures that I have come across to help tell this tale follow:
- WA is much cheaper - The Median Dwelling Price in the Perth Metro market is 45% lower than the Sydney Metro market (Source: CoreLogic, September 2023) – The Sydney Metro Dwelling Price is $1,098,821 whereas for Perth Metro it is $607,083. This is a significant factor when it comes to making your investment dollars and your borrowing capacity go further!
- WA’s prices are growing faster - The Perth Metro Dwelling Price has risen 4.5% in 2023, whereas the Sydney Metro Dwelling Price has risen only 1.2% in 2023 (Source: CoreLogic, September 2023).
- WA’s rental returns are higher - The Perth Metro median rental price is $599 per week (up 13.4% in 2023), compared to the Sydney Metro price of $733 per week (up 12.9% in 2023). Perth Metro’s gross yield is 4.89% compared to Sydney Metro’s gross yield of 3.12% (Source: CoreLogic, Quarterly Rental Review, July 2023).
- WA’s vacancy rate is lower - The Perth Metro vacancy rate is 0.7%, down from 1.2% twelve months ago, compared to Sydney Metro’s vacancy rate of 1.5%, down from 1.9% twelve months ago (Source: CoreLogic, Quarterly Rental Review, July 2023).
- WA has the highest weekly average earnings in the nation – The weekly average earnings for full-time workers in WA is $2,039.30 (Source: Forbes Advisor, August 2023, Average Salary in Australia by City and State). This is a weekly figure $201.30 higher than the national average. There is a noteworthy interstate shift of skilled workers seeking higher pay and better job opportunities.
- WA has the fastest growing population in the nation – According to the ABS, the WA population increased 2.8% from 2023 to 2022, leading the nation over Victoria at 2.4%, QLD at 2.3%, and with NSW growing by 1.9% (Source: ABS, September, 2023, National, state and territory population).
- Perth being named the 12th Best City in the Global Liveability Rankings (Source: Economist Intelligence Unit’s Global Liveability Index 2023) – Our world-class education, great weather, sophisticated foodie and wine scene, beautiful beaches and easy access to holiday spots resulted in Perth being the third biggest mover in these rankings in 2023. Not only are buyers chasing affordable homes, stronger returns and better pay, but they are also seeking a fantastic lifestyle.
These are factors being discussed in the living rooms and on the boardroom tables for NSW buyers that are considering their next real estate decision.
Interstate buyers present different buying attitudes as well as different expectations. They are largely unfamiliar with the process for buying and selling WA real estate. The key contrasts that I have come across in 2023 include the following:
- Sales Method: Auction sales campaigns are mainly used in NSW vs Private Treaty sales campaigns being mainly used in WA – This is slowly shifting in WA with there being more familiarity around the auction process (think of hit shows like The Block and Luxe Listings Sydney), the rise of online auctions during covid such as Opennegotiation, and more sellers electing for no price marketing campaigns or fixed date sales campaigns.
- Deposits Paid: 10% deposits are common practice in NSW vs Smaller ‘fixed amount’ deposits being traditionally used in WA, such as $10K, $20K or $50K.
- Cooling Off: A cooling off period of 5 Business Days exists in NSW vs there being no cooling off period for real estate contracts in WA.
- Building Reports: Structural and Timber Pest Inspection Reports are largely facilitated by the seller in NSW vs Structural and Timber Pest Inspection Reports being requested as a special condition by the buyer in WA.
- Contracts: Specific Contract of Sale prepared by a solicitor or lawyer in NSW vs a standard Contract of Sale prepared by the real estate sales agent in WA.
- Negotiations: Negotiating price and purchasing terms verbally and via email in NSW vs negotiating in writing on the Offer and Acceptance Contract in WA.
- Buyer's Agents: Very common to use a Buyer’s Agent in NSW vs a growing use of Buyer’s Agents in WA.
- Viewings: Making an offer ‘sight unseen’ is very common for NSW buyers vs buying after 1-3 viewings for many WA buyers.
- Market Confidence: NSW buyers are highly confident when it comes to long term property growth vs WA buyers having a more cautious approach when it comes to investing.
It is my expectation that we will see more WA property being purchased, leased out and lived in by buyers from NSW as well as other states and territories. The faster flow of information, video technologies bringing property inspections to your screen 24/7 and more Buyer’s Agents helping interstate and international purchasers will certainly assist in making this so. With more buyers comes new money, fresh thinking and additional skilled workers in to our great state. Major road and rail infrastructure projects as well as world-class tertiary education facilities like the ECU Campus in the city makes Perth a global stand-out in 2023. It truly is WA’s time to shine.
Brendon Habak - Selling Principal