Release ‘pressure valve’ and instantly increase properties for rent by 50%!

Perth’s historic low of available rental properties could instantly increase by 53 per cent if investors bought and rented 1600 apartments for sale in some of the city’s most attractive suburbs.

That was the message from planning firm Urbis to the crowd at an industry event hosted by the Urban Development Institute of Australia WA on Wednesday.

Perth’s rental vacancy rate has further dropped from January’s 0.8 per cent to 0.7 per cent, undercut nationally only by Adelaide’s 0.6 per cent. Stock had stayed below 3000 properties for five consecutive months and without intervention the crisis could last 18 months to several years, speakers told the crowd.

UDIA WA launched a campaign calling for the state to “release the pressure valve” and incentivise investment, pointing to data showing Perth was not only sitting on piles of unsold apartments but that it has the lowest proportion of property investors of all capitals.

Investors provide rental product into the market, but Urbis data shows Perth has gone from 48 per cent of apartments being purchased by investors in 2016 down to 28 per cent in 2020, whereas percentages still hover around 50 per cent in Melbourne, Sydney and Brisbane.

UDIA WA chief executive Tanya Steinbeck said they apartments were also in areas where there was a critical rental shortage.

Average price was only 73 per cent of the median house price within those suburbs, meaning they were relatively affordable.

They were also ideally suited for rentals, with a diverse range of sizes in areas close to infrastructure and employment.

She called for the government to provide a swift targeted incentive to investors who purchased completed apartments on the condition they were immediately offered to the rental market.

“Given the financial disincentives of state and federal legislation in developers renting the stock themselves, this is an opportunity for the state to proactively release the pressure valve on the rental supply crisis until housing stock created through the Building Bonus scheme comes online,” Ms Steinbeck said.

“By offering a short, sharp stamp duty rebate in line with the current off-the-plan rebate scheme to qualified investors with tenancy agreements in place, this is the shot in the arm that investors need who have been sitting on the sidelines waiting for the right opportunity.”

Ms Steinbeck also said stimulus measures to date, though welcome, had focused on the new land market and without fostering investment the crisis was likely to drag on for several years.

Meanwhile, when the evictions moratorium ended on March 28, agents were talking about a 15-20 per cent increase in rents for most of their stock. Not to mention the foreign buyers surcharge as one of the primary barriers to investment: before the surcharge, foreign buyers accounted for around 20 per cent of apartment sales for new apartments, whereas in 2020 this fell to only 6 per cent of purchasers.

If you have a property that you have been considering leasing or maybe you have been considering buying an investment property, please call us today on 08 9339 7079 to discuss how the team at Mi Casa can help you with your property journey.

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