Low vacancy in the WA capital spells great returns for investors
In encouraging news for investors, Perth’s rental vacancy rate is currently sitting at 1.9%, according to the Real Estate Institute of WA, which is close to historic lows for the capital.
“This is good news for investors as tight demand for rentals in Perth is pushing up rental yields,” says Rae O’Neill, Raine & Horne’s Business Support and Development Manager WA. “On the flipside, tenants need to work smart to secure a rental property.” According to Ms O’Neill, construction isn’t keeping pace with Perth’s ballooning population, which is forcing up rents.
Population growth is also set to underpin capital growth in south eastern Perth, which Tim Chant, Principal Raine & Horne Cannington, says is attracting investor interest. “I’ve been advising investors to buy in Cannington for the last six months as the market was on the cusp of an upward turn,” said Mr Chant. “Now the turn has arrived.” To illustrate this point, Mr Chant recently sold a collection of newly-built three bedroom villas at 171 George St, Queens Park for $375,000 to investors. “These are excellent investments, which are currently returning generous rents between $420 and $440 a week.”
Moreover, there’s also a scarcity of rental homes in Cannington, which is forcing existing tenants to pay an additional $20 on the immediate expiration of their leases. “Tenants are even offering to pay a rental increase to avoid the prospect of trying to find new rental accommodation,” explained Mr Chant. “They know they will have difficulty finding a similar property in the same area for the same rent.”
Mr Chant revealed that Cannington’s location is at the core of its appeal. “Cannington has always been a popular place for tenants because of its close proximity to Perth’s CBD,” said Mr Chant. “The problem is that there just isn’t enough stock on the market to keep pace with investor demand.”
Likewise, across the Swan River, Larry Gallagher, Principal of Raine & Horne North Perth, said investors are knocking at his door. “With the share market currently in freefall, the smart money is turning to property investment,” declared Mr Gallagher.
There is even a waiting list for available North Perth rental properties, which has been duly noted by investors. “The vacancy rate across our portfolio is sitting just above zero,” said Mr Gallagher. “In fact, many properties coming up for lease are being snapped up by tenants waiting with applications even before the property appears on the market.” Furthermore, Mr Gallagher considers it is great time to buy an investment property while real estate prices are still competitive.