As the first quarter of 2022 comes to an end, we look at the trends playing out in the Perth rental market now.
Western Australian women and millennials feel homeownership is within reach
A new survey conducted by Bankwest shows that West Australians feel more confident about their ability to purchase a home than buyers anywhere else in the country and that that confidence is being driven by women and millennials.
The Home Truths survey, which collected the responses of more than 1800 Australians, found that 67% of Western Australians felt that homeownership was important. Interestingly, a similar number (60%) felt that it was achievable, setting WA apart from other states like NSW, where although 69% felt homeownership was important, only 47% felt it was achievable.
This confidence amongst Western Australians was driven by women and millennials. In the first Bankwest Home Truths survey, conducted in December 2020, only 30% of WA women felt homeownership was achievable. In this round, twelve months later, that figure rose to 57%. Millennials aged between 23 and 38 years old experienced a similar jump, from 30% to 65% feeling that owning a home was an achievable goal.
Given the uncertainty we’ve all lived through over the last two years and the tight conditions in our rental market, it’s not surprising that survey respondents consider homeownership so important. But the fact that they also feel that it’s achievable is a testament to our strong state economy, low unemployment rate and the relative affordability of property here compared to the eastern states.
So, do these results indicate that more first home buyers will soon be purchasing a home and exiting the rental market, in turn relieving the high demand for rental homes? It’s unlikely. Even if some renters become buyers soon, many more people, such as FIFO workers, those not in a position to take out a bank loan and people looking for a flexible lifestyle prefer, or need, to rent. And given we’re expecting an influx of new would-be tenants now that the WA border is open, it looks like the Perth rental market will remain tight for some time to come.
Ongoing rental supply challenges
As any Perth tenant could tell you, our rental market remains incredibly competitive. But the latest Housing Affordability Report from the Real Estate Institute of Australia (REIA) shows that despite this, WA is still the most affordable place in Australia to rent. The proportion of family income required to make rent repayments here is 19.7%, the lowest of anywhere in the country. As Damian Collins of REIWA points out, this highlights the fact that the main issue facing our rental market is not unsustainable rent prices but rental home supply. As we’ve written before, the current wave of home building is unlikely to ease the pressure on the rental market. Over the next few years, government planning and private development in the CBD will see more residential apartments built in the heart of the city, which will hopefully lead to an increase in centrally located rental accommodation. But the fact of the matter remains that demand is currently outstripping supply in the Perth rental market.
Open borders to bring both more tenants and more investors
The WA border has been open for almost a month now, and it will be interesting to see the impact it has on the Perth rental market. Experts are predicting both an increase in would-be tenants as interstate and international migration resume, as well as more activity from out-of-state investors who are now able to visit Perth property in person before making a purchase. Even before border restrictions were lifted, we were fielding strong interest from interstate investors. In fact, towards the end of 2021, we sold four properties to buyers from out-of-state sight unseen, so eager were they to acquire a Perth investment property as soon as possible. With property in Perth amongst the most affordable in the country, yields healthy, and vacancy rates low, it won’t be a surprise to see an increase in interstate investor activity now that they can inspect the property before they buy.
Thinking about investing in Perth real estate or renting out your Perth property? Maybe you’re looking for your next Perth rental home. Whether you’re an investor, landlord or tenant, we can help. Get in touch with our expert Perth property management team today.