Property investors are crucial to a balanced and healthy rental market

27 July 2022

"The research shows that mums and dads (with one or two rentals) account for over 90per cent of all investors in the market."

Western Australia’s rental shortage has created significant problems for the state’s rental market, with tenants having continuing difficulties finding appropriate housing.

At present, there are less than 2,500 properties for rent in Perth and the vacancy rate is sitting at around 1.1 per cent. In a balanced market, the vacancy rate would sit around three per cent.

Migration increase to add pressure to rental market

WA has also observed a notable uptick in interstate migration, with new Australian Bureau of Statistics (ABS) data showing that WA had its largest ever quarterly interstate migration inflow in the final months of 2021 with more than 13,000 people moving west.

While it is pleasing (particularly for our jobs market) that people are choosing to move to WA and take advantage of our great lifestyle, strong economy and affordable housing, this will put additional pressure on the rental market.

Investor spending still low

There is no quick fix to the rental shortage, however WA clearly needs more investors in the market.

ABS data shows investor lending in WA was $740 million in May 2022, which is below the $1 billion monthly figure we would expect to see in a market as strong as WA. REIWA agents also continue to report that their investor clients are selling and exiting the market.

Without a significant influx of new investors to the market, it is going to be difficult for the WA rental market to reach equilibrium.

Property investors are crucial to a balanced and healthy rental market. The research shows that mums and dads (with one or two rentals) are the most common investors (accounting for over 90 per cent of all investors in the market) and that they utilise property investment to help secure their future.

They also provide an invaluable service to the community – supplying housing and shelter for West Australians. Governments and their state-funded housing simply cannot do this job alone. Without investors, tenants suffer through higher rents and fewer properties.

The more property investors there are in the market, the more available rental stock there will be, the less competition tenants will face and the easier it will be to secure housing.

Moving forward, we need to ensure that private investors are not discouraged from buying residential rental properties in WA, which is why it is incredibly important that the outcome of the review into WA’s residential tenancy legislation is fair and equitable for all parties.