I’ve been pushing the benefits of Perth as an investment opportunity for over 6 months and with good reason! Now, the latest vacancy rates statistics are showing that our jewel in the West is outperforming the Eastern capital cities. Find out why Perth is ideal for implementing my cash flow positive strategy in my recent chat below with The West Australian.
Perth Rental Vacancy Rates Takes a Dip.
By Rhys Prka, The West Australian, June 14, 2020
Perth has shown up the eastern states with far lower rental vacancy rates at 2.3 per cent versus Sydney’s record high of 3.9 percent, according to SQM Research data for April.
That 2.3 per cent represents 4807 vacancies, however, as some within the industry point towards a difficult road ahead for mum and dad investors.
reiwa.com data revealed Perth’s rental stock has been quickly absorbed, with listings falling by 17 per cent in May to 4676, which is the lowest they have been since November 2013.
It is also significantly lower than the same time last year when there were 7243 properties available for rent.
In May, Halls Head saw the biggest spike in leasing activity growth with 33 leases for the month and was closely followed by Nollamara (20 leases), Coolbellup (16 leases), Joondalup (18 leases) and Como (18 leases).
reiwa.com data shows rent prices remain stable in Perth, with the overall median rent sitting at $350 per week during May.
Property Club National Manager Troy Gunasekera predicted that there was an incoming rental famine, which would be most acute for family homes in the outer established suburbs of Perth.
“While rents in the inner-city area of Perth are falling due to more short-term landlords, such as Airbnb, dumping their properties onto the long-term rental market – it is a different picture in the outer suburbs of Perth,” he said.
“The supply of rental properties in these outer suburbs have been reduced by investors being forced to sell off their rental properties over the past five years due to the banks forcing investors from interest-only to principal interest-only loans.
“These rental properties are being bought by owner-occupiers because recent tax changes means that tax depreciation benefits for second-hand properties have been removed, meaning investors are not buying second-hand homes.
“Instead, they are now buying new apartments which have resulted in an oversupply of rental apartments. The end result is that rents for houses in Perth are now rising faster than apartments.
“As a result, Property Club is finding that while rents in the inner-city of Perth are falling, rents for family homes in the outer established suburbs are starting to rise even during coronavirus.”
Scroll DOWN to see my thoughts on the Perth Market below!
According to REIWA data, the median unit rental in March 2020 was $340, compared to houses which sat at $375, with 2554 homes and 2122 units on the market.
The Housing Affordability Report recently released by the Real Estate Institute of Australia said the proportion of a family income required for tenants to pay their rent in Western Australia was 16.6 per cent in March, the lowest in Australia.
This is amongst the Residential Tenancies (COVID-19 Response) Act 2020 which put into place a six-month moratorium on evictions, alongside a ban on rent increases, with the moratorium period starting on March 30.
Small is The New Big Co-founder Ian Ugarte said there was a potential of a triple-whammy of issues for landlords, with a mix of job insecurity, financial belt tightening and an issue of vacant properties.
“With fewer tenants able to afford typical rents, landlords think their only option is to sit on a vacant property for as long as they can weather the storm, or sell at a likely loss in a depressed property market,” he said.
“But COVID-19 actually presents a unique opportunity to help fund changes to an investment property that will yield a better rental return now and help safeguard the investment into the future.”
Need to know more? Join my upcoming LIVE Positive Cash Flow Webinar HERE!
And watch what I predicted below about Perth property back in January 2020.