Looking to buy in WA? Here’s what east coast investors should know

Cath Hart, CEO of the Real Estate Institute of Western Australia (REIWA) recently revealed that Perth property vacancy rate was sitting at a near-record-level of 0.8 per cent, causing rental yields to skyrocket.

Ms Hart revealed that her members were “reporting a lot of activity from eastern states investors”, who hoped to get in on the trend, with Western Australia-based agents like Sean Hughes confirming this surge of interest.

But the REIWA warned that east coast investors must be wary of diving into the Western Australian market without knowing the lay of the land. Sales practices vary from state to state, and REIWA stressed the importance of understanding the unique features of property transactions in Western Australia.

The institute identified three key ways that the Perth real estate market is unique.

1. Private treaty trumps auctions

In east coast states, auctions and private treaty transactions are both commonly used in property sales. According to REIWA, auctions are particularly popular for some buyers because they prevent the tactic of “gazumping”, where a seller accepts a new offer despite having already accepted a lower offer.

In contrast, Western Australian property transactions are predominantly private treaty sales. Unlike in other states, Western Australian vendors cannot accept an offer after they have already accepted another one.

REIWA noted that an exception occurs in subject-to-sale transactions, where a 48-hour clause is sometimes invoked if the vendor receives a better offer.

2. No cooling off periods

In eastern states, it is common for private treaty sales contracts to include a five-day “cooling off” period, but REIWA revealed that this is rare in Western Australia.

Instead, Western Australian buyers are bound to go through with the transaction once the contract is signed, with an exception made for conditional sales where the buyer is unable to get finance.

3. Smaller deposits

Deposit amounts in Western Australia are generally lower than in eastern states. When an offer is accepted, east coast buyers often have to pay 10 per cent of the purchase price as a deposit, but in Western Australia this number is usually capped at around $10,000–$20,000, REIWA reported.

Auctions, however, typically still require a 10 per cent deposit on the day in Western Australia, and REIWA is clear that the sale deposit is not the same as the deposit required by a lender when applying for a home loan.