In this video Jarrad Mahon Managing Director of Investors Edge Real Estate explains what he expects to happen in the Perth Rental Market Prices in 2019.
G’day! Jarrad Mahon here from Investors Edge Real Estate.
Now if you’re a property investor here in Perth, you would know that over the last three years we’ve had a big drop in rental prices. The average rent has gone from $470 a week now down to $350, that’s around a 25% drop and it seriously hurts the hip pocket.
Good news is that vacancy rates over the last six months have dropped from 7.8% which is a huge amount and on the highest levels in Australia. So many properties on the market vacant and was taking a long time to find tenants. That’s now dropped down to 2.7% at the latest figures and we were under 3%, that’s traditionally where we see pressure on rental prices and the rental prices coming back up.
So already we’re increasing rents when they come up for renewal with our existing tenants and we’re leasing properties a lot quicker with typically in one to two weeks and often we’re getting an extra $10 or $20 over what is being advertised.
Now this is obviously area dependent some areas are super hot at the moment other areas are still a little cold but in general we’re seeing prices stay the same if not increase.
So what am I predicting for the rest of this year, if labor gets elected and makes changes to negative gearing. And it’s looking like labor could be quite assured a victory after all the troubles that the Liberals have had, that changes negative gearing would stop a lot of investors from coming into the market for a while.
And we also see a lot of investors that are highly negatively geared try to get out of the market. Those two factors would further reduce the number of rental properties and make a tighter supply and even more pressure on up with increase in rental prices.
So at the moment you’d also know that financing is really difficult, the banks are going through their Royal Commission, have tighten up their lending. They’ve made it very difficult for people to get loans.
Now what’s that meant is that tenants have to rent for longer so there’s more tenants needed to rent as well as investors are struggling to get loans so there’s no longer as many new investment properties coming onto the market.
What that’s meant is that it’s put a lot of pressure on rental prices as well as a population is starting to increase again. Jobs and the economy are really looking up so they’re starting to get a bit of a positive increase in population growth and that’s only going to further add to rental pressure because what they do when they first come to this state, you’re right most of them choose to rent to work out which area is for them. So all of that I’m thinking is going to lead to at least a 5% increase in rental prices and could be as much as 10% so that would be $15 to $35 on the average property across Perth.
Stay tuned for the monthly updates and I will be telling you as I see as we go.