Reports from the ground in one of Australia’s rising capital cities shows demand for rental properties is on the rise.
According to property investment consultancy firm Momentum Wealth, competition between potential tenants has seen a notable increase.
Sebastien How, residential management adviser at Momentum Wealth, said rental enquiries have been notably up in the past few weeks and does not expect a slow down.
“We’re seeing up to 18 or 19 groups of people attend home opens where we would have seen significantly less the same time last year, and we even received 25 rental enquiries for a recent property in Craigie,” Mr How said.
“In some cases, this is resulting in prospective tenants making offers above asking price to secure a property.”
Mr How added owners with properties that appeal the most to tenants will be likely to benefit from the rise in tenant demand.
Shaun Strickland, research adviser at Momentum Wealth, said the cause of the increased rental demand was due to a tightening of already existing rental stock and a slowing investment markets.
“Dwelling approvals inhave seen a significant decline since their peak in June 2016, and we are now seeing the impact of this flow through to the rental market, causing a significant tightening in rental stock,” Mr Strickland said.
“This is in turn leading to a rise in competition from tenants for remaining rentals.”
Despite the population growth slowdown, Mr Strickland can see an upcoming increase in population due to more jobs opening up in Perth’s resources sector, which would fuel rental demand further.
“With rising investment in Perth’s resources market, including the burgeoning lithium market, set to generate thousands of employment opportunities in the coming years, we are anticipating a growth in demand for housing from both overseas and interstate workers,” Mr Strickland said.
“Whilst we don’t expect rental prices to return to peak levels in 2019, this rise in competition from tenants will likely lead to an increase in Perth’s overall rental rates across the year, with the prospect of significant increases in the medium term.”
While the full benefits are yet to be delivered for Perth’s recovery, Emma Everett, the team leader of Momentum Wealth’s buyer’s agents, said investors are finding success from the increased rental demand in the meantime.
“Whilst investors will likely benefit from higher yields, we know that these initial movements in the rental market traditionally foreshadow a wider market recovery, with increased demand and rising rental prices driving investor confidence and pushing more buyers into the market,” Ms Everett said.
“Buyers who are unfamiliar with the property market or don’t have the time to commit to market research should consider speaking to a professional to ensure they are selecting an asset that aligns with their investment strategy and long-term goals.”