• Why the private rental sector is crucial to a healthy rental market

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    Author: REIWA President Damian Collins

    Real estate agent showing a young couple a new house. The house is contemporary. All are happy and smiling. The couple are casually dressed and the agent is in a suit. The couple are being greeted at the front door by the real estate agent.

    The importance of individual property investors in a healthy, thriving rental market is frequently overlooked.  

    Some people suggest that investors are wealthy individuals hoarding large numbers of properties. This is simply untrue. The research shows that mums and dads (with less than two rentals) are the most common investors and that they utilise property investment to help secure their future. 

    They also provide an invaluable service to the community – supplying housing for tenants. Governments and their state-funded housing simply cannot do this job alone. 

    Without investors, tenants suffer

    Property investors and the private rental market are essential to ensuring tenants can find appropriate housing. 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. 

    The last eight months have been challenging for the Western Australian rental market, which has faced low levels of investor activity, a shortage of rental stock, record low vacancy rates and high demand from tenants. 

    Positive trends on the horizon

    Pleasingly, there are now signs investors are returning to market. In early May, the Australian Bureau of Statistics (ABS) released data showing investor finance in WA had surged to a five year high of $462 million in March 2021, which was up from $237 million in March 2020.  

    While we remain some way off the $1 billion figure WA experienced during 2014, this is still a positive trend and one we need to continue to achieve a balanced market. 

    reiwa.com data for May supported the ABS findings too, with listings for rent up 3.8 per cent in May and 7.4 per cent over the last three months. This is an encouraging trend in light of the ABS figures.

    With activity from investors on the rise, we should hopefully see a continued increase in the number of listings come to market in the coming months, which will go some way towards easing the state’s rental shortage. 

    Looking ahead

    Moving forward, we need to ensure the outcomes of the upcoming Residential Tenancies Act review are fair and equitable for all parties, so that property investment isn’t discouraged and there is enough available housing stock in the private rental market to keep up with tenant demand.  

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