Western Australia needs investors to help boost rental stock

Perth is experiencing a rental stock shortage with a vacancy rate of 1.6 per cent and only 3,206 properties currently available for rent on reiwa.com for the week ending 30 August, which is 51 per cent down on the same time last year. 

Low rental stock

You may be wondering why we have seen such a large drop in available properties, where we are now at the lowest vacancy rate since March 2008. There are a few reasons. Firstly, stock is being absorbed quicker because of more people moving back to Western Australia in recent months from overseas and eastern states due to COVID-19.

Importantly, we are still yet to see large numbers of investors return to the property market. Normally we would expect strong investor demand with vacancy rates so low. However, with capital growth expectations being dampened during the long property downturn, investors seem hesitant to return.

Why are there less investors?

Another key factor influencing investor decision making has been the implementation of the Residential Tenancies (COVID-19 Response) Act. Feedback from agents on the ground is that investors are worried about returning to the market due to the limitations on their ability to price rents at market value and evict problematic tenants.

REIWA members have reported that no more than two per cent of tenants have suffered financially due to the impacts of the pandemic. Therefore, it is important that the rental market return to normal conditions as soon as possible in order to get investors back buying and providing housing for tenants.

While these aspects could be causing issues with some investors in the short-term, looking at it from a long-term perspective, now is definitely the right time for those who have been thinking about getting into property investment, to consider investing.

Rent prices on the rise

For a rental market to have an ideal balance between supply and demand, it should have a vacancy rate of around three per cent. With Perth and some WA regional areas experiencing vacancy rates well under three per cent, it is only a matter of time before rent prices begin to increase.

If you are considering making the move into property investment and have questions on where to begin, make sure to reach out to your local REIWA real estate agent or a REIWA buyer’s agent.