Rentals shin­ing hope in WA

Western Suburbs Weekly - - Residential -

THE Perth rental mar­ket is likely to be the WA prop­erty mar­ket’s shin­ing light next year, ac­cord­ing to REIWA.

The in­sti­tute ex­pects sta­bil­ity for the sales sec­tor in 2019, with some notable im­prove­ments in the rental mar­ket.

Pres­i­dent Damian Collins said con­di­tions through­out 2018 had been fairly sub­dued, with the most sig­nif­i­cant im­prove­ments oc­cur­ring in the rental sec­tor.

“We’ve seen weekly sales in Perth hover at around 500 per week through­out the year, while list­ings for sale were largely un­changed from 2017 lev­els, fluc­tu­at­ing be­tween 13,000 and 16,000,” he said.

“List­ings should con­tinue to trend at cur­rent lev­els through­out 2019.

“While we ex­pect sales ac­tiv­ity in 2019 to largely re­flect what we’ve seen this year, there is a pos­si­bil­ity that ris­ing con­sumer con­fi­dence lev­els, cou­pled with im­proved hous­ing af­ford­abil­ity, could trans­late into in­creased sales vol­umes in 2019.”

Mr Collins said Perth’s me­dian house price could im­prove dur­ing the next 12 months if weekly sales re­mained at cur­rent lev­els or bet­ter, but this could be im­pacted by changes to lend­ing con­di­tions.

“If lend­ing stan­dards tighten fur­ther, this could re­strict the num­ber of peo­ple that are able to pur­chase a prop­erty, which could neg­a­tively im­pact sales and prices,” he said.

“Ad­di­tion­ally, if the banks choose to in­crease in­ter­est rates any fur­ther, this also has the po­ten­tial to ad­versely af­fect buy­ing and lend­ing con­di­tions.”

While sales re­mained fairly steady in 2018, the Perth rental mar­ket im­proved, with sta­ble me­dian rents, de­clin­ing list­ings and a plum­met­ing va­cancy rate.

REIWA ex­pects its up­ward tra­jec­tory to con­tinue through 2019, with sta­ble pop­u­la­tion growth and slow­ing new-build­ing con­struc­tion driv­ing the on­go­ing im­prove­ment.

“With pop­u­la­tion growth in WA ex­pected to re­main sta­ble and new dwelling com­mence­ments slow­ing, avail­able rental stock should con­tinue to de­cline,” Mr Collins said.

“This should see com­pe­ti­tion amongst ten­ants in­crease, putting fur­ther down­ward pres­sure on the va­cancy rate, which re­cently dropped be­low 4 per cent for the first time in four years.”

Perth’s over­all me­dian rent price has been $350 per week since April 2017, the long­est pe­riod of sta­ble rents ex­pe­ri­enced since REIWA started record­ing rental data in 2001.

“If list­ings con­tinue to de­cline and leas­ing vol­umes re­main healthy, we should see the over­all me­dian rent price in­crease in 2019 for the first time since Septem­ber 2014,” Mr Collins said.

While REIWA’S 2019 out­look for the Perth rental mar­ket is pos­i­tive, Mr Collins said any changes to neg­a­tive gear­ing could pose a risk for both the rental sec­tor and wider prop­erty mar­ket.

“In the short term, the im­prove­ments we’ve ob­served in the rental mar­ket could see in­vestors re­turn­ing to the mar­ket; how­ever, if changes to neg­a­tive gear­ing are leg­is­lated, this will likely dampen in­vestor ac­tiv­ity and have a detri­men­tal ef­fect on the wider WA prop­erty mar­ket just as it is start­ing to find its feet,” he said.

“As the next Fed­eral elec­tion nears, REIWA will con­tinue its ef­forts to en­sure politi­cians do not med­dle with neg­a­tive gear­ing to en­sure a healthy and sus­tain­able rental mar­ket into the fu­ture.”

There were also pos­i­tive signs for the re­gional mar­ket, with im­prove­ments in the min­ing sec­tor ex­pected to lead to an im­prove­ment in over­all mar­ket con­di­tions.

“Port Hed­land, Kar­ratha and Kal­go­or­lie are ar­eas to watch, with the new min­ing projects go­ing a long way to restor­ing con­fi­dence in these re­gions,” Mr Collins said.

“These projects are ex­pected to cre­ate thou­sands of new lo­cal jobs.”

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