Disclaimer: These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.
Although rent prices across the state have been on a downward trajectory for the last couple of years, the rate of decline has begun to slow in recent months falling only 1 per cent last quarter. The availability of rental properties remains high at above 10,000 listings encouraging landlords to get their asking rents right and properties presented at a high standard.
Although landlords don’t currently enjoy the dominance they experienced during the boom periods a few years ago, property investment is still a smart decision. And thankfully, interest rates on borrowings continue to sit at historically low levels, mitigating some of the short term financial discomfort resulting from lower rents.
When pricing your property and preparing it for lease, it’s crucial you heed the advice of your property manager. Tenants are out there in good numbers. The fact leasing activity in Perth was up 23 per cent in December 2016 compared to December 2015 proves just how active they are.
In order to secure a tenant, you must meet the market. The pace of rent reductions has slowed but tenants will continue to request rent reductions when seeking a lease renewal. The size of the reduction can now be negotiated more reasonably but speak to your property manager about what’s realistic before deciding to allow your property to fall vacant.
Such has been the pace of the change in market conditions it has taken landlords some time to adjust to this tenants’ market. The market will change one day but meanwhile, property owners are wise to remember that less rent per week is better than having a long vacancy period with no rental income at all.
It is also advisable to be flexible with the conditions you put on your rental. For example, not allowing tenants who own a pet to rent your property can deter people who would otherwise be interested. You’d be better off considering tenants with pets on a case by case basis, secure in the knowledge the bond and pet bond (and landlord insurance) will be there to cover any pet-related damage.
With signs emerging that the rental market has begun to stabilise, 2017 will be the year of opportunity for current and prospective investors. Compared to investment markets on the east coast, yields in Perth are more appealing and property values have held up extraordinarily well given the broader economic conditions in WA.
by Hayden Groves
REIA Deputy President