Perth’s rental market is on a steady path to recovery, which is good news for investors but alarming for those already under rental stress, especially with soaring job losses off the back of the pandemic.
New figures from the Real Estate Institute of WA found median rents had improved 13 to 23 per cent for affluent beachside and riverside suburbs, from Trigg down to Madora Bay and inner-city suburbs Joondanna and Osborne Park, over the past 12 months until May.
The exception was City Beach, which had a 12 per cent correction, dropping to $750 a week.
REIWA president Damian Collins said people should exercise caution when looking at each suburb since any fluctuations could simply come down to what housing stock had come up for lease; in the case of Mt Claremont, median rent jumped 23 per cent – Perth’s highest climb – to $800 despite being adjacent to City Beach, which recorded the worst growth.
“Our rental vacancy rate across Perth is the lowest it has been since 2015 and the number of properties for lease has dropped significantly over the last 12 months, we’re down to below 4000 properties for lease,” Mr Collins said.
“In the peak of the market when we had a high vacancy rate, say three years ago, we had over 12,000 properties for lease.
“Properties are generally renting quite quickly and rents are going up on new leases.
“You can’t put them up on COVID or established tenants, but certainly if a property becomes vacant the rental prices are going up on what they were 12 months ago.”
Mr Collins said confidence in WA property had been soft for so long there had been a dearth of investors over the past few years, and investors would prove critical to creating more rental stock for those reliant on rental properties.
“The median rent in Perth has come off $100 a week over the last five years so it is very cheap here; our national body did a study and our median rent as a percentage of average income was only 16.6 per cent compared to Sydney and Melbourne, where it was closer to 25-30 per cent,” he said.
“We have not seen a lot of new construction in apartments over the last two years, so a balanced healthy rental market with a moderate rent growth that’s not excessive is really important to the overall economy.”
But Lisa Kazalac, acting chief executive for Shelter WA, said those on low or very low incomes and reliant on JobSeeker would find themselves squeezed out of the private market, which had already come up from a median of $300 a week to $350.
“Already 1 per cent of the stock in the private rental market is only accessible [and] if you think about a tightening rental market that 1 per cent is getting smaller,” she said.
“The McGowan government has, to their credit, announced the social housing economic recovery package back in June of $319 million, which is great,” Ms Kazalac said.
“But the problem that the housing system faces is that we’ve seen under-investment in social housing for a very long time and so when you come to points in the economy now where it is at critical crisis, it amplifies the gap and that’s what we’ve seen, and what we’re going to continue to see if there isn’t federal investment and if there isn’t capacity to keep people in their homes in the short term once all these initiatives in September end.”
A University of WA co-authored paper into how state and federal fiscal policies have impacted people’s financial wellbeing surmised that 12 million Australians were concerned about their financial future as a direct consequence of the virus, with expectations mortgage stress levels would exceed those seen during the Global Financial Crisis.
The Financial Wellbeing and COVID-19 paper’s lead researcher Jeremiah Brown, from the Centre for Social Impact at UNSW Sydney, said prior to the pandemic, one-third of the Australian private rental market was in housing stress.
“Australia had the second-highest household debt-to-income ratio in the world,” Dr Brown said.
“Approximately 30 per cent of Australian households have less than one month of income worth of savings and one in eight Australians would not be able to raise $2000 within one week in an emergency.
Mr Collins said while he understood some segments of the market may find increases to rent challenging, many people had enjoyed low rents relative to their incomes for a long time.
“We fell from $460 to $350, so we fell a long, long way; so that was a 25 per cent drop from peak to trough,” he said.
“We’ve picked up about $10 a week, so we’re not anywhere near in 2014 rental prices – we’re $100 off that.”
Kalamunda, Carine and Hillarys fell 8 per cent.
“So the cycle moves slowly, it’s not like it will jump up $100 overnight, but the trend is in the upwards direction,” Mr Collins said.
Source: WA Today