Record reductions in rental stock could prove positive news for some Perth property owners, according to property investment consultancy, Momentum Wealth.
Recent data from the Real Estate Institute of Western Australia showed that listings for rent dropped below 5000 to 4676 listings in the week ending 31st May – the lowest rental stock levels recorded in Perth since November 2013.
Team Leader of Momentum Wealth’s property management team, Amanda Kroczek, said the return to a downward trajectory in rental listings comes from a renewed uplift in leasing activity and limited new stock coming to market.
“Despite an initial slowdown in tenant activity in response to social distancing restrictions and market uncertainties surrounding COVID-19, REIWA data showed that leasing levels rebounded by 27% in May which, combined with the limited new stock coming on stream, has supported a continued reduction in rental stock.”
“These factors have also supported the resilience of rental prices across Perth’s leasing market over the COVID-19 period, with the median rent holding steady at $350 per week, and this could actually be primed to increase if current trends persist” she said.
Stock reduction varying across the market
However, Ms Kroczek said while tightening stock levels meant some regions could be well positioned for a return to rental growth once the emergency period is lifted, the effects are not being felt equally across the market.
“While some regions such as Perth’s North-West suburban corridor saw rental stock reduce by over 48% in the year to June 2020, this tightening is not evenly spread across the market, with some areas such as Perth’s Inner region recording a much lower rate of reduction at 15% – largely due to the large composition and continuing supply of apartment stock in these CBD areas,” she said.
Ms Kroczek said property owners need to remain conscious of local market conditions when determining their rental strategy.
“Given the disparity of performance across the market, it’s really important for owners to work together with their property manager to ensure they are setting the right pricing strategy for their individual property and the conditions in their local area to make sure they are maximising their property’s performance and mitigating the risk of costly vacancies.”
The property management team leader said owners in these low stock locations who aren’t in a position to increase rents need to remain proactive in their rental strategy.