Perth property: Good news for investors
Perth’s rental market has well and truly bounced back
Perth’s rental market has well and truly bounced back post-COVID-19, with some of the lowest vacancy rates we’ve seen in years.
Last month, REIWA reported that the Perth rental market’s vacancy rate had dropped to a 12-year low of 1.6 per cent – the lowest since March 2008.
A month on, Perth’s vacancy rate has lowered yet again, dropping a further 0.3 per cent.
To put this in perspective, a vacancy rate of about three per cent is what’s generally considered a healthy balance between supply and demand.
Which explains why rental properties placed on the Perth market are currently being snapped up at breakneck speed – that is, the quickest time to lease since the construction phase of the last mining boom in February 2015.
While this is all great news for investors who have been cautiously eyeing the market, it’s otherwise sobering – Perth is experiencing a serious rental stock shortage.
Thankfully, the solution is simple – the return of investors to the market.
As the lifeblood of the profitability and health of the Western Australian property sector, the state is in urgent need of investors to ensure the wellbeing of the sector going forward.
With vacancy rates so low, strong investor demand would normally be a given at a time like this. However, thanks to capital growth expectations being dampened during the long property downturn, we are still waiting on significant numbers of investors to return to the property market.
WA’s Residential Tenancies (COVID-19 Response) Act is also serving as a powerful disincentive. Why would an investor choose to return to the market at a time when their ability to price rents at market value and evict problematic tenants is constrained?
The recent extension of these emergency tenancy laws by the State Government continues to undermine investment confidence at the very time the state needs to get investors back buying and providing housing for tenants.
In the words of REIWA President Damian Collins, “in a time when we need more investors entering the market to help build up rental stock supply, we are putting up barriers to not only prevent new investors, but also not helping those currently providing a basic human need – housing for all Western Australians”.
Property is Australia’s biggest employer, contributing more than 13 per cent of gross domestic product and employing 1.4 million people. With the right policy settings and market incentives, it can and will be a massive source of economic recovery at a time when it is desperately needed, but not without investors.
Now is definitely the right time to invest, not only to avoid the rental shortage becoming a rental crisis, but also to make the most of the lowest vacancy rates Perth has seen in 12 years and continued subdued pricing levels.
What WA needs now is investors to get off the sidelines and back into the market – long-sighted investors who can overlook the waning short-term COVID-19 complications will benefit both in the short and long term.