Western Australia remains the nation’s most affordable state to live in, a mantle it has held for almost three years.
Tenants in Western Australia require just 16.6% of their income to cover their rent, well below the national average of 23.5%.
This is positive news for landlords and tenants alike in the current economic climate.
WA keeps affordability mantle
Western Australia has topped the nation for rental and housing affordability for the 11th straight quarter in the Real Estate Institute’s latest Housing Affordability Report.
The state’s rental affordability improved by 0.1 percentage points in the March quarter to 16.6% of income, the lowest in Australia.
Across the nation, rental costs accounted for 23.5% of family income during the quarter, rising to a high of 30.5% in Tasmania.
Real Estate Institute of Western Australia (REIWA) President Damian Collins said the state had so far defied expectations of a market downturn during the COVID-19 pandemic.
“It’s pleasing to see that WA has remained the most affordable state, while seeing prices and rents holding and not falling significantly, as was predicted by many early on,” he said.
Rental vacancies also low
Perth also has lower residential vacancies than other states, according to investment research firm SQM Research.
Rental vacancies for the city fell from 2.3% to 2% in May, compared to a national average of 2.5% and a high of 4% in Sydney.
Perth’s vacancy rate has fallen steadily in recent years, from 5.5% in December 2016 to current levels.
In addition, REIWA says rental listings have fallen to their lowest level in almost seven years after a 17% decline in May.
This means new rental stock coming on to the market is likely to be quickly absorbed.
What it means for landlords and tenants
The affordability and vacancy figures are positive news for landlords and tenants for a number of reasons.
As unemployment rises and Australia enters its first recession in 30 years, Western Australia’s superior affordability means tenants are less likely to experience rental stress.
Low vacancy rates will help to underpin the rental market through this period of economic volatility, providing further reassurance to landlords.
This is confirmed by REIWA data showing Perth rental prices remained stable during May at $350 a week.
However, it is worth noting that the Housing Affordability Report does not reflect the full impact of COVID-19, which will become apparent in the next quarterly edition.
Choice of property manager critical
It is more important than ever for landlords and property managers to understand the changing fundamentals of the rental property market in this climate.
As a specialist property manager focused on the Perth market, Rentwest’s experienced team has expert knowledge of the city’s rental property market.
We build strong relationships with our landlords and tenants to ensure positive outcomes for both sides of the rental equation.
And, as active participants in the Real Estate Institute of Western Australia, we advocate for policy changes that maintain a healthy environment for buying, selling and renting property.
Our team would be happy to advise you on issues that may affect your investment property portfolio.