Perth rental market favourable for investors: experts

Perth rental market

Perth rental market favourable for investors: experts

By Bianca Dabu | 24 August 2020

As Perth’s vacancy rate dropped to its lowest level in 12 years, investors could be presented opportunities to take advantage of the expected growth in the capital city’s rental market.

Fresh data from the Real Estate Institute of Australia (REIWA) showed that the vacancy rate for PerthPerth, TAS Perth, WA’s rental market dropped to 1.6 per cent, the lowest it has been since March 2008.

While the capital city has maintained a healthy vacancy rate of around 3 per cent for 21 consecutive months, having it sit below 2 per cent indicates that Perth is starting to see the impact of limited stock.

As a result, rents are likely to rise over the coming months, according to REIWA president Damian Collins.

“In some areas, agents are reporting rents are already on the move up,” he said.

In July, there were 3,553 properties for rent on, which is 50 per cent less than what was available in July 2019.

While rental stock is trending downwards, Perth is also seeing rental absorption rates increase, Momentum Wealth’s property management team leader Amanda Kroczek said.

“This is putting downward pressure on Perth’s rental vacancy rates, with our own internal vacancy rate sitting at just 0.5 per cent across July,” she said.

“On the ground, our property managers are seeing this reduction in stock translate into increasing competition at home opens, with properties in high-demand locations often receiving multiple applications from tenants, many of whom are offering above asking price to secure their property of choice.”

Ultimately, this competition among prospective tenants created by limited supply could mean well for investors in the Western Australian capital.

“While the extent of these improvements is varying based on location and property type, properties on the whole are leasing quicker, and we’re already seeing increases in rents for properties with new tenancies, which we expect to flow through to broader rental market growth once the emergency period is lifted,” Ms Kroczek highlighted.

Combined with the relative affordability of Perth’s property prices, these conditions are already supporting increasingly favourable rental yields for investors, Momentum Wealth’s residential investment committee chair Emma Everett added.

CoreLogic’s July report showed gross rental yields of 4.3 per cent and 5.2 per cent respectively for houses and units in Perth, which is considerably higher than the combined capital city averages of 3.3 per cent and 3.9 per cent.

“While yet to translate into significant investor activity, we’re already seeing increased buyer demand from [first home] buyers and owner-occupiers off the back of government stimulus, with a number of areas showing leading growth indicators in the form of shorter days on market, lower stock levels and high online property views,” Ms Everett concluded.

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Perth rental market favourable for investors: experts
Perth rental market
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