Rental famine looming out west

1 minute read

Rental famine looming out west

by Cameron Micallef 01 June 2020 1 minute read

Western Australia is tipped to have an emergency rental crisis as the supply of new homes shrinks dramatically, a property institution explains.

June 01, 2020

According to the Property Club, in PerthPerth, TAS Perth, WA there has been a 5.8 per cent drop in the number of rentals coming to market.

Not only are the number of rentals falling, the number of properties being constructed is down 18 per cent, with buyers preferring old homes over new ones.

Troy Gunasekera, national manager for Property Club based in Perth, said the coming rental famine would be most acute for family homes in the outer established suburbs of Perth.

“The construction of new family homes in Perth has crashed over the last five years and is getting even worse and underlined by the latest national data from the RBA,” Mr Gunasekera said.


The club highlighted that only 8.8 per cent of total housing finance was for new properties, when in normal times this number would be closer to 40 per cent.

The problem, according to the Property Club, is due to the types of loans, which forced investors to sell.

“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 forcing investors from interest-only to principle and interest loans.”

“These rental properties are being bought by owner-occupiers because recent tax changes mean that tax depreciation benefits for second-hand properties have been removed, meaning investors are not buying second-hand homes,” Mr Gunasekera explained.

Combined with policy changes that saw investors favour apartments, detached dwellings are seeing a significant reduction. 

“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.”

“These policy changes have resulted in a sharp decline in second-hand family homes available for rent in Perth.”

“As a result, Property Club is finding in Perth that while rents in the inner city are falling, rents for family homes in the outer established suburbs are starting to rise even during the coronavirus.”

“Family homes in Perth are now receiving multiple applications and landlords are now in a position to raise their rents,” Mr Gunasekera continued.

The Property Club is not expecting things to recover shortly in the Western capital as the economic fallout from COVID-19 starts taking an effect on property purchases.

“The expected recession and rising unemployment will make it harder for first home buyers wanting to buy a home, meaning that they will stay in rental properties for much longer, reducing the supply of rental properties.”

“At the same time, owner-occupiers will be forced to sell their homes because of the impending recession, and these people will be searching for rental properties during a time of reducing supply,” Mr Gunasekera concluded.

Rental famine looming out west
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About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your... Read more

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