Residential residency rate across Perth slightly declined in October as investor finance demand reached low levels across the state, the Real Estate Institute of Western Australia found.
October’s residential vacancy rate inhas slightly lowered compared with the previous month and now sits at 0.95 per cent, which is close to the 40-year low of 0.8 per cent reached in 2007.
According to REIWA president Damian Collins, while the vacancy rate only marginally dropped this month and the current times have been determined as an ideal time to enter the market, the market still lacks any significant response from investors.
As vacancy rates come closer to a 40-year low, investor lending activity remains at low levels, with demand for investor finance 77 per cent lower than its peak.
“In 2007, when the vacancy rate hit below 1 per cent, investor lending activity in the peak six-month period was $5.8 billion.”
“However, despite seeing the same investment opportunities, investor lending finance in the six months to September 2020 is 77 per cent lower than this,” Mr Collins noted.
According to him, while REIWA welcomes indications from the WA government that they will not extend the emergency tenancy laws, it’s critical that investors get back into the market.
“Otherwise, there will be a significant increase in the demand for public housing.”
REIWA found that there were only 2,786 properties listed for rent on reiwa.com by the end of October, which was 53 per cent less than the year prior.
Perth’s median rent increased $25 to $375 per week when compared with 2019. Still, the WA capital remains the cheapest capital city to rent across Australia.
Right now, the proportion of family income needed to meet rent repayments in REIA’s Housing Affordability Report is 16.1 per cent in WA, making it the lowest in Australia, with the ACT following with 19.2 per cent.
Moving forward, further increases to rent are expected in Perth, according to Mr Collins.
“When the freeze on rents was put in place, Perth’s median weekly rent was sitting at $350, which is far from the $450 plus rents many experienced during the boom in 2013.”
“While the potential increase will impact some people, most will be able to adjust household size and location, which will free up stock and help limit rent increases to a slower, manageable pace,” he concluded.