A falling average vacancy rate in Perth’s rental market is pointing to a recovering property market on the whole, according to industry experts.
The rental vacancy rate in Perth dropped to 4.2 per cent in the three months to August, according to REIWA figures.
“What we are seeing is a steady yet healthy improvement in tenant activity,” REIWA President Hayden Groves said.
“Steady rents, easing supply as listings for rent continue to fall and stronger demand with more leasing activity all point to the rental market leading Perth’s property market recovery.”
Momentum Wealth Managing Director Damian Collins agreed the falling vacancy rates provided an encouraging sign for the potential recovery of Perth’s property market.
“The lower vacancy rate, as well as improved leasing activity and a decline in properties available for rent, provides a strong sign of increased demand for living in Perth, which is a key trigger for a property market recovery,” he said.
“Traditionally, increased activity in the rental market foreshadows a wider market recovery, with higher demand for rentals and absorption of excess stock pushing rental prices upwards and presenting more attractive yields to investors.
“Whilst we are yet to see a major improvement in rental prices, if history is anything to go by it’s only a matter of time before increased demand begins to take its toll on rental prices and pushes more buyers into the market.”
Abel Property Leederville Property Consultant Jason Ryan said the biggest impact on property prices was supply and demand.
“Demand is driven by buyer confidence,” he said. “Interestingly, when talking to many qualified and ready buyers, we are finding many of them are now coming out of the rental market.
“These are people who may have sold over the last few years and have been renting whilst the market has fallen. Now we seem to have hit the bottom of the market they are very interested in making sure they don’t miss the boat and thus are proving to be cashed up, prepared and ready buyers.”
Mr Ryan said he expected further capital growth in the near future, driven by increased buyer confidence and prosperous business forecasts.
“It is unlikely the market will bottom out further, it has been a very difficult three to four years,” he said.
Ray White City Residential Selling Principal and Auctioneer Brent Compton said the Perth property market was seeing a tightening of good rental properties.
“The market is actually quite competitive now for tenants,” he said.
“Just as night follows day, price growth comes after rental price growth.”
According to Mr Compton, it is all about timing.
“Perth prices have already started to turn around and the biggest benefit for buyers is buying at the right price,” he said.
Mr Collins said investors who acted soon would be in a prime position to benefit from the predicted growth in property prices.
“There is now a prime opportunity for buyers to benefit from the relative affordability of the Perth market before property prices rise, but investors need to remain vigilant in ensuring they are purchasing properties with the right drivers in place to profit from this growth,” he said.
“Recent investment in WA’s resources sector will be one of the key drivers for Perth’s recovering property market.
“The fact we are seeing increased investment across Perth’s major industries is a strong sign that demand for Perth property is set to continue, with these projects providing a major trigger for increased levels of migration to WA.”