A population exodus has had a negative impact on WA’s rental market over the last two years, with vacant stock expected to increase, according to the president of the state's peak body.
The Real Estate Institute of Western Australia (REIWA) reports that WA’s population has decreased at a greater rate than other Australian states and territories.
“Migration peaked in the year to September 2012 before starting a rapid decline, with the latest readings of Western Australia's population growth for the year to June 2014 falling to its lowest level in eight years,” said REIWA president David Airey.
The decrease in migration corresponds with the sharp growth in rental listings, which have continued to rise since mid-November 2014.
Data from the institute shows that the overall median rent fell 2.2 per cent to $440 in the latest December quarter, which is a result of a 2.3 per cent fall in the median multi-residential rent dropping to $420.
“The stock of property 'For Lease' bottomed out at around 2,100 in September 2012 and has grown some 200 per cent since. Over that time, the vacancy rate has risen from 1.8 per cent to over 4.0 per cent,” Mr Airey said.
Mr Airey explained that this translates to roughly 6,000 properties being available for lease.
The institute reports that Perth's CBD, where much of the vacant stock is located, was the first area to experience the effects of this population drop.
“There was a rapid build-up of stock through to late 2013, which also saw rents fall across the sub-markets over the past two years,” Mr Airey said. “In 2014, the downward pressure on rents spread to the outer parts of the Perth market where there was a stronger build-up of stock in percentage terms than the central market, which has put downward pressure on rents in virtually all areas.”
The REIWA president identified the fall in oil exploration and coal projects as being a driving factor in WA's troubled property market.
“Although there is always more that the government could do to encourage new business, the problem is that much of the state’s economic resources are privately owned.”
The REIWA said that with little talk of new mining projects in the pipeline, 2015 looks to be another challenging year for WA’s rental market, but Mr Airey describes the situation as simply “part of the cycle that must be ridden out”.
“Although we might see a stabilisation in the state’s rental market, it is more likely that vacant stock will increase.”