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Figures from the Real Estate Institute of WA shows Perth’s median rent continues its downward trend with the recent figures showing a median rent of $365 per week. This downward trajectory in residential rents that began almost three years ago and has begun to stabilise in more recent months. At last count, there is around 10,500 rental properties available for lease metro wide; significantly more than a market parity level of around 4,500.
This rapid increase in supply can be directly attributed to the end of the mining investment boom which has lead to fewer jobs meaning population growth in WA has slowed to its lowest level in eight years.
Fremantle has not been immune. Fremantle’s median rent is $440 per week, down by 6 per cent on last year although the real story here is supply with 23.6 per cent more rentals listed giving tenants plenty of choice. On average 52 days are needed to find a tenant, 17 days longer than this time last year.
Across the metro area, the vacancy rate sits near 7 per cent; a steep climb from its low of 1.8 per cent just three years ago. The rapid change in the rental market has caught many by surprise especially Landlords who are usually reluctant to agree to a tenant’s request for a rent reduction. However, given the rapid rise in rents from 2009 through to 2013 (by 80 per cent in some areas) a $20-50 per week reduction is relatively insignificant. Landlords thinking they can renew rents with existing tenants at last years’ levels are, frankly, kidding themselves. Thankfully, interest rates on borrowings continue at low levels mitigating any short term financial discomfort for Landlords.
With around 7000 new apartment dwellings due for completion by the end of 2017, supply of rental property will continue to dog rental markets. Rents in more affordable metropolitan areas remain, in contrast, relatively stable with areas where rents are around the median of $400 per week experiencing stable returns for investors.
Like all real estate stories, this one is cyclic in nature. In September 2007, Fremantle’s median weekly rent was $333, it is now $440, a 32 per cent increase. The chance of rents falling back by the same percentage amount over the next nine years is very slim indeed.
By Hayden Groves
REIA Deputy President