According to REIWA, the WA residential property market is in a great position to rebound strongly on the other side of COVID-19.
In particular, from a rental position, while we saw a decline in listing and leasing activity throughout April, the first two weeks of May outperformed the entire month of April due to easing restrictions.
Across Australia, the national rent values increased by 0.3% according to CoreLogic’s latest figures with Perth leading the rental gains with a 0.8% growth over the last month.
According to Domain’s latest figures, Perth’s declining rental vacancies continued to boost rents throughout the first quarter of 2020. During the quarter, Perth saw a 2.7% increase in rents for houses ($375) and a 6.7% increase for units ($320). This goes hand in hand with Perth’s record low vacancy rates which has supported our strengthening rental returns.
As vacancy rates continued to drop in Perth, this has meant there are less properties available to rent and while Perth remains one of the most affordable rental markets for both houses and units across Australia, rental prices have been able to hold their value throughout the pandemic. This is a good sign that our economy has remained steady, putting the Perth rental market in a good position to rebound strongly.
While the overall outlook for Australian rental market is broadly the same, markets like Sydney will likely be faced with oversupply issues, which were already downward pressure on rent prices. With the Perth rental market performing strongly now for some time, it’s expected that WA property investors are less likely going to be impacted the same way the Eastern state investors will be.
In fact, here at Benchmark our landlords have fortunately been minimally affected by the COVID-19 restrictions with only 2% of our tenant portfolio being impacted by Hardship of which, our Directors were able to ensure the best outcome for each party.
Damian Collins, president of REIWA, has stated that we’re expecting between 5% and 10% rental growth as a result of population growth with migration from overseas improving, also the number of people leaving the state has dropped off dramatically.
The decline in property prices over the last 5 years has Perth sitting one of the most affordable capital cities to invest in right now. With affordability, low interest rates and a tightening rental market, we could be seeing more first homebuyers getting into their own property and investors maximising this “opportunistic time” in the Perth property market.
What’s still to come?
With several state tenancy laws being introduced when COVID-19 hit to help provide relief for both tenants and landlords, are we likely to see long-term impacts?
While we’re not quite out of the woods from the impacts of COVID-19, it seems unlikely that the emergency measures that have been put in place will outlast the pandemic. What’s important to consider here is that while these packages and measures are good news now, tenants and landlords need to consider the long-term impacts when it comes time for tenants to repay incurring rental debts and what that means for landlords who are relying on that rent to be paid. We may in fact see the government stepping in again to help minimise any ongoing economic crisis for property investors and landlords.
According to Rolf Howard at Owen Hodge Lawyers, as we start to return to “normal life”, we also may see more of an emphasis on long-term rental security for tenants or a more balanced rental system that better serves both tenants and landlords.
Perth poised for a faster recovery according to the experts
Amid all the economic uncertainty, we have seen consistent growth over the last 6 months, with values rising 0.2% throughout April and our quarterly growth figures up to 1% according to CoreLogics latest data.
Property sales are up in Perth and rose consistently towards the end of April to the beginning of May. This trend comes as we see buyer confidence start to return to the market and people looking to take advantage of quality, affordable stock.
With a continued price growth trend and tightening supply, Perth is expecting to see a good rebound in sales transactions and in a prime position to lead the market across Australia. In fact, according to Emma Everett from Momentum Wealth’s residential committee, Perth was one of three capital cities to outperform its six-month average pace of change alongside Darwin and Adelaide.
Of course, we mustn’t forget the mining activity that has been picking up over the past few years which will see more stimulus into our economy and help support population growth as we start to move into a recovery phase.
With the COVID-19 shaking things up with our property markets, landlords and tenants have certainly found themselves in unfamiliar territory. While we can’t be sure of what’s going to happen on the recovery side, there are strong indicators that demonstrate why Perth is in a good position to rebound strongly compared to other major capital cities, and our rental market will likely remain strong for the foreseeable future.
If you’re in a position where your current property manager isn’t able to help you successfully negotiate rent payments, reductions, and more, then have a quick chat with our friendly team about what Benchmark can offer as part of our COVID-19 Strategy Response for landlords like you. If you’re ready to switch, then go here to try our exceptional service with a no lock-in contract – ever!