Perth rental market poised for takeoff
Perth’s rental market is becoming increasingly tight, with listings plunging and strong demand for properties continuing through the coronavirus crisis, prompting calls that the city could face a rental shortage as early as next year.
Data from the Real Estate Institute of Western Australia showed there were 4,676 properties available to rent at the end of May, the lowest level since November 2013.
REIWA said competition for properties was heating up across the Perth metropolitan area, with the far southern suburb of Halls Head the best performing location in May, with 33 properties leased.
Other top performers included 20 lease deals being signed in the northern suburb of Nollamara, while there were 18 residential leases closed in Joondalup.
Median rents remained steady at $350 per week.
Rental Management Australia chief executive Andrew Graham told Australian Property Investor Magazine that the number of properties leased by his company in May was a substantial uptick not only compared to April, but also the previous 12 months.
“April was down a little bit, obviously due to Covid and the restrictions etcetera, but in May it’s been, from a leasing point of view, it’s been quite substantial,” Mr Graham said.
Mr Graham said the WA property market was already rebounding from the crisis, particularly in comparison to Victorian and New South Wales markets.
“Investor enquiry is starting to build from a sales point of view, there are more investors in the market now than I’ve seen in the last 12 to 18 months,” he said.
Mr Graham said RMA was consistently receiving multiple applications for rentals across its books in Perth, with home opens attracting in excess of 10 groups.
Part of that was due to potential renters not having access to homes in April due to COVID-19-related restrictions, but Mr Graham said there were other factors also at play.
“We’ve found that in a lot of areas where students reside near university precincts, the competition for rentals is heating up because everyone is anticipating coming back to uni in July,” he said.
Property Club national manager Troy Gunasekera said rentals would likely be in short supply by next year, particularly for family homes.
Mr Gunasekera said Western Australia’s five-year new home construction downturn had acutely affected housing supply in Perth’s outer suburbs.
“The supply of rental properties in these outer suburbs has been reduced by investors being forced to sell off their rental properties over the past five years due to the banks moving investors from interest only to principal interest only loans,” Mr Gunasekera said.
“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 has resulted in an oversupply of rental apartments.
“The end result is that rents for houses in Perth are now rising faster than apartments.”