by Hayden Groves REIWA President https://reiwa.com.au/
Although rent prices across the state have been on a downward trajectory for the last couple of years, the rate of decline has slowed, with the median rent price holding steady at $350 per week since April 2017. The number of rental properties on the market has also improved, declining to approximately 8,500 listings metro-wide, well down from the peak of 11,300 in 2016.
While Perth landlords don’t enjoy the dominance they experienced a few years ago, property investment is still a smart decision. And thankfully, interest rates on borrowings continue to sit at historically low levels, mitigating some of the short term financial discomfort resulting from lower rent prices.
When pricing your property and preparing it for lease, it is crucial you heed the advice of your REIWA property manager. Tenants are out there in good numbers, in fact, leasing activity reached an all-time high last year and remains at above-average levels in 2018.
Provided your rental property is marketed competitively, you have a very good chance of securing a tenant. However, if you choose to price your property higher than your agent’s recommendations, tenants are very likely to bypass your listing.
The first two weeks of listing your property for rent are the most crucial. Get your initial asking price wrong and you can end up chasing down the market, destined to end up with a weekly rent price below market value, plus you’ll bear the rent cost you missed out on when your property was vacant.
Pleasing for landlords, the Perth market has improved over the last six months and we are slowly seeing it transition into a more balanced market. The Perth vacancy rate declined to 5.3% in January, the lowest level since July 2015 and down from a peak of 7.2% in June 2017. This sharp decline indicates normalcy is returning and market parity, in terms of supply and demand, is not far away.
Despite these obvious improvements, REIWA’s forecast for 2018 cautions against expectations of rapid growth in rent prices over the coming year. Property owners are still advised to meet the market – you are better off with less rent per week than having a long vacancy period with no rents income at all.
It is also advisable to be flexible with the conditions you put on your rental. For example, not allowing tenants who own a pet to rent your property can deter people who would otherwise be interested. It is in your best interest to consider tenants with pets on a case-by-case basis, secure in the knowledge the bond, pet bond and landlord insurance will be there to cover any pet-related damage.
If you are thinking of investing or would like a better understanding of how your area is performing, speak to a local REIWA agent about your options.