Should you rent or buy in Perth in 2023?

With rents and property prices rising, one asks, should I buy or rent in Perth in 2023? Is it worth my financial investment? Am I entering the market while it is too high?

In this write-up, I will compare a four-bedroom and two-bathroom house across three suburbs with a varied price range from data gathered towards the end of 2022 and into 2023. We will benchmark the current average interest rate of 5.0%.

Suburb Applecross (Affluent)

Rental: $800/week

Purchase

Price: $1,500,000

Deposit: $300,000

Loan: $1,200,000

Repayment: $6,442/month or $1,487 per week.

I chose Applecross as a benchmark for an affluent suburb as it was a practical suburb for raising a family due to being in the catchment area for a good school zone and its distance to the city. It’s still within reach for high-earning couples.

For families looking to upgrade to live by the riverside and being a mere 10mins from the city, Applecross is a great place. Based on the data above, it’s better to rent than to buy, as the property value in this area has grown significantly, but rent has yet to go up fast enough.

Suburb Canning Vale (Upcoming)

Rental: $600/week

Purchase

Price: $700,000

Deposit: $140,000

Loan: $560,000

Repayment: $3,007/month or $694/week

Canning Vale is an upcoming suburb with potential growth once the Thornlie – Cockburn train line has been completed. If you want to know why it is an upcoming suburb, read my post about it here.

Based on the data, it may seem like it would be cheaper to rent in Canning Vale. Still, suppose you are planning on staying in Canning Vale for an extended period of time. In that case, it can also be worth paying the additional loan repayment, as the predicted growth of Canning Vale over the next few years would have increased the value of the property quite significantly, hence giving you financial leverage.

Suburb Armadale (Affordable)

Rental: $450/week

Purchase

Price: $380,000

Deposit: $76,000

Loan: $304,000

Repayment: $1,632/month or $377/week

Armadale has been known as a rough suburb due to its security concerns. However I do believe that Armadale has the potential to grow as it has amenities such as a train line, bigger land sizes and affordable house prices while only being 30km from Perth city. It would only be a matter of time that as the price of property grow in this suburb, security concerns will be a thing of the past.

The growing housing shortage in Australia has increased the rental prices of properties throughout Perth. This raised rental prices up to $450 per week even in places like Armadale.

If we are to look from a data stand point, it would actually be cheaper to purchase a property and pay significantly less over time. Which also makes Armadale a really good investment suburb, based on current market trends.

So should you rent or buy in 2023?

Based on the comparison of the three suburbs, it really depends on your main objective. Are you looking to live long term, short term or is it for an investment?

There is no right or wrong answer, but if you do have time to speak to us, we could help you to review your options. Most of all, our consultations are at no charge. If you are looking for advice, speak to us here.