The ABC has today published an interesting article on Perth’s sharply slowing rental market, where rental vacancies have doubled over the past six months, as have the number of tenants breaking their leases:
Not so long ago real estate agents were reporting queues of prospective tenants at home opens and people offering above the advertised rental price in an attempt to get a lease in an over heated market where demand was outstripping supply.
And earlier this month, Australian Property Monitors released figures showing Perth was just shy of topping Sydney as the most expensive place to rent in the country.
The data revealed that Sydney’s median price tipped $500 a week, while Perth’s was just $10 behind.
But has Perth’s rental bubble burst?
Tim Nickol spends his days immersed in the Perth rental market.
As a property manager for Harcourts Realty, his catchment area primarily covers the inner city precinct.
He says activity in his rental portfolio has dropped about 20 per cent…
He says the precincts hit most by the rental downturn are inner city suburbs and he believes the decline is linked to a fall in business activity…
Residential tenants, who have lost their jobs because of a slowdown in business mining investment, are struggling to maintain paying their high rents.
Most signed long leases during the boom which locked them into a set term contract at the higher prices.
Now they are experiencing tougher financial conditions and it is prompting them to break their leases.
The head of the Real Estate Institute of WA, David Airey, said the number of break-lease tenants was nearing one-in-four, up from one-in-eight last year…
“There are around 4,200 vacant rental properties on the Perth market, which represents a vacancy factor of 3.3 per cent,” he said.
“When you compare in December last year when we had just around 2100 properties and a vacancy factor just fewer than two per cent.”
He attributed the fluctuations to changes in people’s employment.
“People generally move where there is employment and where there is no employment for them and then they will need to get out of a rental contract,” he said.
Certainly, a look at SQM Research’s asking rents series points to trouble, with asking rents down sharply across Perth over the past quarter:
This month’s MacroBusiness Member’s report, due for release next week, will examine the risks to Perth’s housing market as the mining boom unwinds.
