Residential vacancy rates have returned to their tighter pre-Christmas levels in January, with Perth the hardest Australian city to find a rental home, according to data from SQM Research. In fact, there are just over 1,000 rental properties up for grabs currently in the capital.
“Perth vacancies appear to be quickly disappearing and I would suggest if vacancies persist at under one per cent, then this will translate to accelerated rent hikes in that city for 2012, ” said Louis Christopher, Managing Director of SQM Research, speaking to Smart Property Investor. Angus Raine, CEO, Raine & Horne, added, “This is great news for those aspiring investors considering buying a WA rental home in the short-term.”
Landlords in the Perth suburb of Maida Vale, for example, are attracting good dollars for rentals, as well as multiple applications from hopeful renters. “It’s the three and four bedroom homes with two bathrooms that are proving most popular with tenants,” says Simon Mills, Principal of Raine & Horne Maida Vale & Hills, which was named the leading real estate group’s Top Office for ‘Number of Sales’ and ‘Dollar Value’, at the recent Raine & Horne WA annual awards, held at the Mercure in Perth.
“For a three bedroom home with two bathrooms, an investor might pay about $440,000, which can earn about $450 a week in rent.” This represents a healthy gross yield in excess of 5%. Moreover Mr Mills, who grabbed second behind Peter Vetten, Principal, Raine & Horne Mandurah, in the hotly contested Top Principal’s ‘Dollar Value’ category at the awards, anticipates tenant demand could push weekly rents up by as much as 5% by the end of 2012. “In some cases, tenants are already offering more than the landlord’s asking price to secure a Maida Vale home.”
In Western Australia’s second largest city Mandurah, Mr Vetten reports that the local rental market is also tightening, while buyer enquiries have picked up the pace since December. “It’s also fair to say that investors are creeping back into the market and have an eye on waterfront properties,” says Mr Vetten.
Drilling down, and Mr Vetten reveals that apartments are seriously in the sights of opportunist investors. “Apart from their prominent position, waterfront apartments are affordable, with two-bedroom apartments available from $450,000,” says Mr Vetten, who was also named Raine & Horne’s Top Salesperson (Number of Sales) in WA. “People are buying them with the prospect of long-term appreciation.”
Savvy investors are also taking an interest in older homes on larger blocks with development potential, according to Mr Vetten, who adds, “Existing owners must be prepared to match buyer expectations to sell a Mandurah property.”