Landlords In Perth Have Reason To Worry As Property Yields Touch Record Lows

For landlords in Perth, a recent report from CoreLogic RP Data comes as a reason for concern. The report shows that rental yields have drastically reduced in as many as seven cities across Australia, including Perth. To increase the woes of the landlords, growth remains at record low levels.

While rent has increased marginally in most parts of Australia, the Perth metro region has seen a sharp decline of 6.5% in rent for houses, and 7.5% for the apartment units. The median housing rents per week has fallen from $470 in December 2013 to $420 in November 2015 (source: Reiwa). The growth in Rental yields of Units has also witnessed a more or less similar pattern and currently stands at $395 per week.

As of the week ending 10 November 2015, as many as 5300 houses and 3600 units are lying vacant and available for rent in the Perth metro region alone. Combined vacancy rates are at an all‐time high at 5.6% (Reiwa).

Experts attribute the fall in rental yields to the decline in net migration to Perth, low interest rates, a steady supply of new houses for sale and an increased first home owner grant for new dwellings, which has made the home buyer’s market more appealing. The slowdown is expected to continue for some time as the construction of many new properties will soon be completed, including nearly 8000 apartments in Perth CBD. This is going to further increase the supply of new homes, giving the residents of Perth more options when choosing between buying or leasing a property.

How landlords in Perth can survive the impact of this decline:

Needless to say, the current scenario has caused hardship to the landlords whose properties have been lying vacant. For landlords with occupied properties, a vacating tenant will require re‐leasing and the risk of having to accept a lower rental price.

The key to surviving this scenario for landlords is to ensure that their properties do not remain vacant. Remember that a vacant property yields no income to the landlord. Ensure the property listings are attractive and stand out among the stiff competition that they will face from other vacant properties vying for the attention of the potential tenants. Landlords are encouraged to speak with their property manager in regards to boosting the enquiry rates from quality tenants.

Failure to market the property properly will result in the properties being vacant for a long time. The only workaround to this problem in such a situation will be to reduce the rent, resulting in a further loss of income. However, it still is better than keeping the property vacant. So landlords need to keep their minds open for this option too.

Readers should always seek their own independent advice prior to making any decisions regarding property or finances.

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