Perthis experiencing a rental stock shortage with a vacancy rate of 1.6 per cent andonly 3,206 properties currently available for rent on reiwa.com for the weekending 30 August, which is 51 per cent down on the same time last year.
Low rental stock
Youmay be wondering why we have seen such a large drop in available properties, wherewe are now at the lowest vacancy rate since March 2008. There are a fewreasons. Firstly, stock is being absorbed quicker because of more people movingback to Western Australia in recent months from overseas and eastern states dueto COVID-19.
Importantly,we are still yet to see large numbers of investors return to the propertymarket. Normally we would expect strong investor demand with vacancy rates solow. However, with capital growth expectations being dampened during the longproperty downturn, investors seem hesitant to return.
Why are there less investors?
Anotherkey factor influencing investor decision making has been the implementation ofthe Residential Tenancies (COVID-19 Response) Act. Feedback from agentson the ground is that investors are worried about returning to the market dueto the limitations on their ability to price rents at market value and evictproblematic tenants.
REIWAmembers have reported that no more than two per cent of tenants have sufferedfinancially due to the impacts of the pandemic. Therefore, it is important thatthe rental market return to normal conditions as soon as possible in order toget investors back buying and providing housing for tenants.
Whilethese aspects could be causing issues with some investors in the short-term,looking at it from a long-term perspective, now is definitely the right timefor those who have been thinking about getting into property investment, toconsider investing.
Rent prices on the rise
Fora rental market to have an ideal balance between supply and demand, it shouldhave a vacancy rate of around three per cent. With Perth and some WA regionalareas experiencing vacancy rates well under three per cent, it is only a matterof time before rent prices begin to increase.
Ifyou are considering making the move into property investment and have questionson where to begin, make sure to reach out to your local REIWA real estate agentor a REIWA buyers agent.
