PERTH’S vacancy rate for rental properties has hit a 20-year high as landlords report a spate of tenants breaking leases.
~ Rents across Perth cheaper as vacancy rate hits 20-year-high
~ Claremont sees biggest drop in rents for tenants in houses
~ North Coogee sees biggest drop in rents for unit tenants
The vacancy rate is now more than 5 per cent — its highest since December 1995, when Paul Keating was Prime Minister and Coolio’s Gangsta’s Paradise topped the music chart, Real Estate Institute of WA figures show.
Landlords are now being encouraged to offer incentives — such as free Wi-Fi or a week’s free rent — to lure tenants, with experts warning the vacancy rate has yet to peak.
The median weekly rent for Perth is $420 for houses and $395 for units, down 13 per cent from 18 months ago and the lowest figure since 2011.
Landlords who once had up to 40 tenants fighting for the one property are now reporting a rise in tenants breaking leases as they nab themselves bargain properties elsewhere in Perth.
At the height of the mining boom, families in Perth resorted to living in camping grounds because they couldn’t find rental properties.
Now, as population growth slows and the economic downturn continues, property managers say it is difficult to get prospective tenants to even turn up to viewings.
Calculated by the number of unoccupied rental homes on the market, REIWA says a normal vacancy rate is about 3 per cent.
Wealthy suburbs are offering the best bargains, with Claremont’s median rent for houses falling 30 per cent in the past 12 months — a drop of $332 a week. Peppermint Grove had the second-biggest decrease with weekly rent falling $475 or 24 per cent.
For units, North Coogee was the hardest hit after a number of new-build apartments became available, with median rent falling 50 per cent in the past year, or $425. Cloverdale, 10km east of the CBD, had the second-biggest decrease with a drop of 15 per cent, or $80.
“There’s no doubt it’s a tenant’s market,” Gow Property director Dee Gow said.
“If the property isn’t up to scratch or well presented, tenants are breaking leases … We’re encouraging our landlords to offer incentives like free Wi-Fi, new airconditioning, letting them keep pets or even offering a week’s free rent.
“It’s not an easy market to get a tenant in. We’re having a lot of prospective tenants making bookings to inspect properties, but then not turning up because they can afford to shop around.”
Momentum Wealth managing director Damian Collins agreed landlords were better accepting a reduction in rent than losing a tenant.
“They’re paying your mortgage and often it’s going to cost you more to have a vacant property for a few weeks than drop your rent,” he said.
Inside Realty director John Meuleman recently rented out luxury properties in Mount Pleasant and Applecross to groups of young people and said landlords should keep an open mind to “non-stereotypical groups”.
Hegney Property Group director Gavin Hegney said with many apartments set to hit the market, he didn’t think the vacancy rate had peaked yet.
“If you’re signing a lease, I would be looking at getting six months instead of 12 because there is room for rent to fall again,” he said.
He said the executive market was offering good opportunities, because companies were now hiring locals as opposed to expats.
Source: CoreLogic RP Data, median rent decreases from 2014 to 2015.