Mid Year Market Review

 In Investing

Has the bubble burst for Landlords?

Well, it all depends on who is asking…general media reports are not always relevant to your investment property. There are many factors involved such as; location, type of residence (house or unit), accommodation, chattels and rental potential (affordability).

Leasing activity decreased by one per cent in the Greater Perth region during the
March 2021 quarter. Here at The Property Exchange we are most certainly finding the enquiry and attendance level at viewings has reduced since end of April 2021, reflecting the moratorium ceasing 29 March and tenants have now found their new properties.

Prior to the moratorium ending, there was a massive surge in the rental market with tenants trying to secure properties all at once, the perfect storm that had been brewing since the moratorium was initially extended in September 2020 – essentially just delaying the inevitable. This saw rent prices peak massively and days on market reduce even further, resulting in an unsustainable rental market.

We do have a little way to go, but overall find we are on the right track for the rental market to being back to a more stable condition, so don’t get me wrong, it’s not a ‘drop’ in the rental market – it’s just back to more steady flow of supply and demand.

Another positive with the moratorium ending is that we’ve seen investor activity start to build again, as evidenced by last month’s ABS investor finance figures, which is producing more rental stock and helping to slow down rental price growth.

“Not only are listings up 3.8 per cent for the month, but over the last three months we have seen rental listings increase 7.4 per cent, which is quite substantial after a long period of declines,” Damian Collins – REIWA

As mentioned above, this is what we are finding in our local market throughout the central and western suburbs. I’m sure if you ask another property professional in a more outer suburban area – they will have a different view on “what’s happening in their rental market?”

For example, recent data shows that suburbs such as Alkimos, Halls Head, Gosnells, Rockingham and Nollamara all had the strongest median rent price growth during the month of May. So this really just reiterates my first point – it all depends on the location of your investment and the other variables mentioned.

Stand-alone and larger family homes are still in high demand with low stock levels, especially here in the Western Suburbs, meaning landlords can achieve great rents and shorter days on market, whereas unit rents have more varied movements.

In summary, there are currently circa 6000 new homes in Perth that will be completed by end of year. Approximately 50% of the current sales market are tenants and first home buyers, this will result in many more homes being available to rent over the next six to nine months (Credit: Tim Lawless, RP DATA).

What this means for you as in investor – strike while the iron is hot! WA is still the most affordable state in Australia for tenants to rent. Investors are absolutely essential to keeping WA rents affordable and to assist with the current shortage in supply.

As an investor – don’t be influenced by the media hype, instead take advice from your experienced & knowledgeable property manager. Price your property fairly, this allows you to obtain a higher level of interest and as a result more hype on your property generally resulting in more applications, sometimes higher rental price offers and ultimately a preference in quality tenants to choose from.

If you would prefer to test the market at a more desirable price, no problem, but just be prepared to make adjustments on the rental price within the first few days of being listed to prevent from your listing becoming stale or less desirable – we all notice when properties have been listed for a while and will naturally wonder – what’s wrong with it? This, we want to avoid. It’s about finding a good balance between pricing right and achieving the best possible rent as quickly as possible! I promise that you will save money in the long run.

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