New | Perth chases Asian buyers as home prices drop

As forest fires shrouded Singapore in a blanket haze last year, CBRE Group’s Lloyd Jenkins sat down with a group of high-level property investors at the city state’s five-star Fullerton Hotel and showed them pictures of white beaches and clear, blue skies. This is Perth, he said, and there is a lot of opportunity.

Jenkins, managing director at CBRE in Perth, and property developers are trying to drum up investment in the Western Australia capital, where housing values as measured by CoreLogic dropped 3.7 per cent last year, the worst performance among the country’s capital cities, as a mining boom dissipated.

While a recovery may be some way off, Perth property is cheap now relative to the record prices on the east coast of Australia. This is the right time for cashed-up Chinese investors to snap up deals, according to Jenkins. He is establishing a residential marketing division for Perth this month ahead of what he expects will be a pick-up in interest.

“The market starts in the so-called nerve centre of Australia, being Sydney, and it works its way until yield compression gets to a point that it’s not worth playing; then they move north to Queensland and then eventually they cross the Nullarbor,” Jenkins said, referring to the flat desert plain that westbound travellers cross to reach Western Australia.

Jenkins’ optimism has yet to be reflected in a property market reeling from the end of the mining boom. Prices soared 18 per cent from the end of 2008 to a peak in December 2014 as the resources-rich state attracted a flood of workers to mines in the Pilbara region, one of the world’s biggest sources of iron ore, to meet Chinese demand for commodities.

A slowdown in China has since depressed oil and iron ore prices, and mining and energy companies are cutting jobs. Perth dwelling values in October dropped to the lowest since June 2013, according to research firm CoreLogic, while rents have decreased 9 per cent in the past 12 months and vacancy rates are the worst across the country, according to Reiwa, the real estate institute of Western Australia.