Mum and dad investors key to rental stock rise
Perth tenants are facing a grim reality, with the median rent price predicted to soon smash $600 per week.
Limnios Property Group Licensee and Managing Director James Limnios said Perth could expect more rental woes this winter after one of the sharpest rent rises in recent history.
“Just over two years ago, the median rent price in Perth was $400 per week and, today, there are only about 71 houses throughout Perth with a weekly rent of $400 or less being advertised,” he said.
“Based on current trends, the median rent in Perth will reach a record $600 per week by mid- year.”
Mr Limnios said Perth’s median rent price had just recorded one of its biggest jumps in recent history after it shot up by $45 to reach $545 per week during the three-month period from November 2022 to February 2023.
“This huge price rise was driven by a famine in rental properties, with the rental vacancy rate falling to its lowest level in over
40 years during this period,” he said.
“The rental market continues to be in a pressure cooker environment with just 1803 properties available for rent, compared to 1991 four weeks ago and 2345 this time last year. “Limnios Property Group, which has been operating in the fringe and inner-city area of Perth for more than 50 years, believes this is the tightest rental market in more than four decades, with our company reviewing rents on a weekly basis.”
Recent REIWA data for the week ending February 19 revealed there were 1787 properties for rent in Perth -0.8 per cent lower than the previous week.
The previous week’s rental listings figure is 9.6 per cent lower than levels seen four weeks ago and 23 per cent lower than a year ago.
Mr Limnios said the fastest way to increase the stock of affordable rental properties in Perth was to incentivise mum and dad investors to buy more established properties.
“The average investor owns just one or two investment properties to help fund their retirement,” he said.
“More than 90 per cent of all rental properties in Perth are owned by these mum and dad investors, and they hold the key to solving our current rental crisis before it gets even worse.
“Because of the long delays in construction times, the flow of brand new investment properties coming onto the Perth property market has slowed to a trickle at a time when an increasing number of people are moving to Perth from interstate and overseas.”
With thousands of Perth property investors exiting the market over the past three years, Mr Limnios said a majority of their homes had been purchased by owner- occupiers – a trend that has acted as a major contributor to the rental crisis in Perth.
“With lending to property investors in Perth expected to fall over in the coming months due to rising interest rates, both the State Government and local governments need to urgently work together to provide a financial package of incentives that encourage property mum and dad investors from Western Australia and throughout Australia to buy established homes in Perth over the next year,” he said.
“The State Government should slash stamp duty and land taxes, while local governments should reduce rates for investors who buy established homes until the supply of new rental properties reaches a level of a balanced rental market in Perth.
“The joint financial package should be targeted at properties priced below $550,000, as these will deliver a quick injection of affordable properties into the rental market.”
Article in the West Australian published on 25 February 2023
