Buying as an Investor in Perth: The Pros, the Cons, and the Fine Print

Buying an investment property in Perth looks simple from a distance: buy a unit, find a tenant, collect the rent, sell one day for more than you paid. Up close it is a business with a tax system, a tenancy law, a strata scheme, and a human being living in your asset. Here is the honest version of the pros, the cons, and the fine print.

The case for Perth

Perth’s inner-city corridor offers something most east coast investors envy: entry prices where the rent can genuinely cover a meaningful share of the costs. Apartments, villas, and townhouses from Maylands through Mount Lawley, Highgate, and into the city rent quickly and are tightly held. Vacancy in recent years has been low, tenant demand has been strong, and the price of an established two bedroom unit still sits well under the price of a house.

The case against, stated honestly

Perth is cyclical, and its older units are the most cyclical stock in the market. They rise on scarcity and cheap money and fall back towards their rental yield when conditions turn, and the swings can be brutal. Owners who bought older units at the 2014-15 peak watched values roughly halve by the bottom in 2019-20, and some spent years unable to sell without crystallising a loss. We wrote the full forty-year story of these cycles in our history of Perth unit prices, and any investor buying today should read it before signing anything.

Depreciation, in two lines

Buildings constructed after September 1987 carry capital works deductions of 2.5 per cent of eligible construction cost a year for 40 years, and that includes many renovations by previous owners. Plant and equipment can generally only be claimed on new items since the 2017 changes, so a depreciation schedule from a quantity surveyor matters most on newer or renovated stock, and it usually pays for itself in year one. Your accountant and a schedule are the whole play here.

Capital gains tax, in three

The gain is taxed in the year you sign the contract to sell, not the year you settle. Hold longer than 12 months and resident individuals generally get the 50 per cent discount. Everything you spend, from stamp duty to the settlement agent to the new hot water system, belongs in a file, because your cost base is built from receipts and the deductions you have claimed come back out of it.

Your tenant has rights, and that is fine

WA’s 2024 tenancy reforms limited rent increases to once every 12 months, gave tenants a proper pathway to keep pets and make minor modifications, and tightened the rules on ending tenancies. A periodic tenancy needs 60 days notice without grounds. A fixed term survives a sale, which cuts both ways: it protects your income stream while you hold, and it shapes who can buy from you when you sell, because a buyer who needs to live in the property cannot wait out a long lease. None of this is a reason not to invest. It is a reason to run the tenancy properly, because a stable, well treated tenant is the single most underrated contributor to an investor’s return.

What can go wrong

The honest list: buying at the top of a yield cycle, underestimating strata levies and special levies, an uninsured rent default, maintenance left until it becomes structural, a self-managed bond dispute, and selling with the wrong strategy for a tenanted property. Almost every item on that list is either avoided by buying on fundamentals or handled by professional management. That is the dovetail into KPR Property Management: we manage the same corridor we sell in, owners deal with a senior property manager, and the owner portal shows you everything without a single email. The under-rented, under-maintained unit is such a recurring story that we wrote it up separately in tired units, cheap rent, and the $150,000 difference. If your property is managed elsewhere, switching is simpler than you think.

Before you buy

Read our Investment Buyers guide for the current stamp duty, budget, and obligation detail, run the numbers through the calculators, including the capital gains tax calculator for the exit, and contact us so investment grade stock reaches you early. This article is general information, not financial or tax advice; confirm your position with the ATO, RevenueWA, and your own adviser.

KPR is not licensed to give tax advice and nothing in this article is tax advice. For your own position, speak to a registered tax agent. We refer clients to Evolve Accountants and Business Advisors in Subiaco.

By James Yeoman, Director of KPR Perth Pty Ltd T/A Key Performance Real Estate