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 slowed in recent months remaining the same average median of $350 per week since April last year. The availability of rental properties remains above long-term averages but has retracted to 8300 listings metro wide, well down from the peak of 11,300 in 2016.
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 experienced of late.
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 is at all-time highs with the volume of leases created in 2017 at record levels and well above 2016’s leasing activity.
In order to secure a tenant, landlords still need to meet the market with tenants dealing harshly with and ignoring properties advertised at market rents even marginally above the market. The first two weeks of offering your property to the market are most important as pent up demand from the tenant pool react quickly to new offerings. Get the asking rent wrong and you end up chasing down the market, destined to end up with rent below the market along with additional weeks’ of vacancy.
The market is changing to a more balanced one but 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.
The Perth vacancy rate fell to 5.5% in the December quarter down from 6.3% in September indicating that normalcy is returning. Market parity in terms of demand and supply is likely to see vacancy rates sitting at around 4.5%; not far away.
by Hayden Groves
REIA Deputy President