Falling vacancy rates indicate positive prospects for Perth property
The average vacancy rate in Perth’s rental market has fallen to its lowest level in over three years, according to recent data released by the Real Estate Institute of Western Australia (REIWA).
The latest statistics revealed the rental vacancy rate in Perth has dropped to 4.5%, a figure not seen since early 2015.
This marks a considerable improvement on last year’s data, when rental vacancy rates reached in excess of 7% in mid-2017.
Momentum Wealth’s Managing Director Damian Collins said the falling vacancy rates provide an encouraging sign for the potential recovery of Perth’s property market.
“The lower vacancy rate, as well as improved leasing activity and a decline in properties available for rent, provides a strong sign of increased demand for living in Perth, which is a key trigger for a property market recovery,” he said.
The total number of properties listed for rent has witnessed a significant decline over recent months, with rental stock dropping to 7,584 in the first week of September – 25% lower than the same time last year.
Job growth a key demand driver
Mr Collins said job growth in WA has played a crucial role in driving the uplift in rental demand.
“Rising levels of investment, particularly in WA’s mining and resources sector, have been key in creating more employment opportunities and driving the economic recovery in Perth, with this job growth now translating into an increased demand for housing,” he said.
According to ABS statistics, more than 24,000 jobs have been created in Perth over the past two years, with a number of new projects now being added to the pipeline.
BHP Billiton, Rio Tinto and Fortescue Metals Group are amongst some of the major industry players to announce the expansion of their operations in recent months, with the companies set to spend billions of dollars on new mining projects in the next four years.
Mr Collins believes investment in WA’s resources sector will be one of the key drivers for Perth’s recovering property market.
“The fact we are seeing increased investment across Perth’s major industries is a strong sign that demand for Perth property is set to continue, with these projects providing a major trigger for increased levels of migration to WA,” he said
Positive outlook for Perth property
With Perth’s rental market showing strong indicators of recovery, Mr Collins said it is only a matter of time before rising rental demand flows through to property prices.
“Traditionally, increased activity in the rental market foreshadows a wider market recovery, with higher demand for rentals and absorption of excess stock pushing rental prices upwards and presenting more attractive yields to investors”
“Whilst we are yet to see a major improve in rental prices, if history is anything to go by, it’s only a matter of time before increased demand begins to take its toll on rental prices and pushes more buyers into the market,” he said.
Mr Collins said investors who act soon will be in a prime position to benefit from the predicted growth in property prices.
“There is now a prime opportunity for buyers to benefit from the relative affordability of the Perth market before property prices rise, but investors need to remain vigilant in ensuring they are purchasing properties with the right drivers in place to profit from this growth,” he said.