Is this really a headline we will read on the front page of a Perth newspaper this year?
The rapid decline in available rental housing stock over the last 12 months (in the order of a 27% decline) and a vacancy rate that has plummeted to 2.8%, from a record high only 12 months ago of 7.3%, are telling indicators.
Critically, in a market place where investors have not been contributing to the pool of new rental stock for some years, an uptick in rental demand is going to result in increased rents. The landlords will be saying ‘ about time’, having suffered horrendous yields on their investments for many years.
Interestingly, a contributing factor to the rental tightening over the last 12 months is the pool of potential owner occupier buyers who have been affected by the fallout from the Banking Royal Commission. Unable to get the the same finance that they could until not that long ago, this cohort of real estate consumers have become unwilling tenants.
So what should we do with this information?
Rising rents are certainly the beginning of the real estate cycle’s upswing. But with curtailed buyer activity linked to the availability of finance, there has been no associated general rise in prices. Yet against a backdrop of increasing wages and increasing numbers of full time employees there are mixed messages.
Certain segments of the Perth market have enjoyed double digit growth in the last 12 months, but overall the past 12 months have shown an over 1% drop in the overall median price.
It seems the real estate market’s engine is revving but the hand brake is still firmly on here in WA.