Spring is in the air and with the change of season we are seeing real changes in the activity levels within the Perth rental and sale markets, we take a deep look into what that will mean for us. For landlords we also take a look at some very interesting findings on how to attract and retain a good tenant.
Sale Market Update
What the latest statistics are telling us
The supply of property on the market has reduced from it’s maximum level in June of 17,500 listings in Perth metro area to the current level just over 15,500 listings…Phew!
However this is still well above the long term Perth average of 12,000 listings . At the same time weekly sales volumes have increased from 700-800 sales per week in July to 900-1000 sales per week in August, tracking marginally above the number of sales at the same time last year.
Spring is traditionally an active time in the Perth property market and we will see a flurry of homes coming up for sale over the next 4-6 weeks. With interest rates looking to have stabilised for the next 12 months and seller expectations having adjusted to meet the market, I expect an increase in sales to follow and overall supply of property on the market to remain steady.
All factors considered the coming quarter will be a much better time for property owners to sell but this requires a very clear plan and well executed sales strategy. If you would like to discuss your options please give me a call in the office on 9472 1606 or email email@example.com
Predictions for the next 6 months
With supply levels remaining above the long term Perth average, the median house price will continue to decline with some suburbs faring much better than others.
The residex market update from the CEO John Edwards, shows the declining trend in median house price from $521,000 in March 2008 to $471,000 in August 2011 (see graph below). Representing a total reduction of 9.6% or $50,000 over this period. Further correction is expected for next 6 months and is not likely to exceed more than 5%. Source: Residix Blog
With the uncertainty of how global instability will continue to affect us, no one can make predications beyond 6 months with any level of accuracy. However I think we can all be thankful that we are living in one of the most insulated countries in the world.
Rental Market Update
Rental demand softened over winter with less renters along at property viewings, resulting in many of our properties being re-let having to adjust their rental price back $10-20pw to meet the market and find a new tenant quickly. Demand has returned stronger over the last month as we come into Spring, however the rental market is still very price sensitive with as little as $10 in the asking rental price making all the difference to tenant enquiry levels.
Rental market predictions for next 6 months
The latest Residex rental predictions have the Perth rental median price increasing from $380pw to $425pw over the next 6 months and would be a critical driver of investors back to the market. Source: Residix Blog
Ideas for attracting and keeping a good tenant
An investors return is greatly impacted by the costs of changing over tenants, a good property manager will minimise the vacancy period but you still have the cost of letting. Encouraging a tenant any way we can to feel at home and stable is the best way to keep them for a longer period.
Recent findings from a national survey carried out by Rent.com.au in June 2011, gives us some points to consider when wanting to attract and keep a good tenant.
“This survey highlights key issues and lease conditions renters want, highlighting their desire to make the property they rent more of a home, rather than just a place to rent,” said Rent.com.au CEO Mark Woschnak.
When it came to wanting to make their rental more of a home, 71.8% of renters wanted the ability to hang their own pictures, and 56.6% wanted to be able to modify the garden. A good kitchen was also highly considered by renters (79.6%) as important in making their rental a home.
“One of the standout responses to the survey was that 71.4% or renters want to be able to have a pet, with 60% responding that this would influence which property they rent,” he said.
“Often landlords are quick to dismiss allowing pets as they consider the potential for damage to their property. However most pet owners are responsible, and a landlord with a hard to tenant property could improve their ability to attract long term tenants and often on more favorable rental terms by allowing pets, where pet bonds can be used to help protect landlords from potential damage.”
Other key finding of the survey was that half of the renters surveyed took 12 weeks or more to find a suitable property to rent, with over 60.3% finding it difficult to inspect and apply for properties, showing a greater need for flexibility by landlords and property managers to accommodate tenants personalizing their rental homes.
One of our points of difference at Investors Edge is that our property viewings are held after hours and on weekends. We find that in making it easier for tenants to inspect property, we get more people along to viewings and therefore rent property much quicker.
“Clearly the era of renting has emerged with 71% of respondents either unable to, or not wishing to purchase a property. Therefore these renters become long term tenants for those landlords prepared to be more flexible on allowing modifications to their rental property,” Mr Woschnak explained.
Landlords wishing to maximize their rental returns would be wise to consider these increasing trends and adapt their mindset to provide flexibility in their lease conditions.
I’m looking forward to helping buyers, sellers and landlords get some great results during this coming quarter of high activity. If you are thinking of making a change I invite you to give me a call and arrange a time to discuss your options.
I’m also going to get stuck into some dreaded Spring cleaning and get the picnic rug back out for some relaxing and romantic time in the sun. Feel free to connect with me on Facebook so I can share what you get up to.