Author: REIWA President Hayden Groves
Much has been made in recent times about the WA rental market favouring tenants. While it certainly is a good time to rent and tenants do have a healthy supply of stock to choose from, this does not mean prospective investors should be deterred from utilising property investment to help secure their future. First and foremost, real estate markets are cyclical. While at present you may not reap the higher weekly rent prices experienced several years ago, there are still plenty of benefits to investing in property in WA.
Now is the time to buy
For starters, it’s a good time to buy. In fact, you could argue that there is no better time to take advantage of more affordable housing prices to secure your first investment property or add to your portfolio. The real estate market will inevitably change and the Perth market has begun to stabilise, providing the opportunity to secure an investment in a softer market which ought to deliver stronger growth opportunities into the future. It’s a smarter move than buying at the top of the market cycle.
Encouraging signs in Perth’s rental market
You may be concerned about finding a tenant to lease your property. Although rental stock has declined recently, there is no denying it remains higher than the long term average. However, Perth’s rental market is exhibiting some encouraging signs for investors, with listings stock falling below 10,000 for the first time in about 18 months and the median rent price is steady at about $350 per week. Tenant activity is also noticeably higher, and in May we experienced the highest leasing figure ever recorded in Perth. Tenant demand is certainly there.
Favourable interest rate conditions
The other thing to keep in mind is although weekly rent prices may be lower than they used to be, so too are official RBA interest rates which have remained at the historic low of 1.5 per cent since August 2016. This is a big advantage for property investors in the current rental landscape helping Perth deliver a much stronger rental yield than property in the Melbourne and Sydney markets where entry level prices are high.
Another benefit of property investment is negative gearing. With both sides of federal politics either promising to maintain the taxation benefits of negative gearing or “grandfathering” the rules such that those with existing investment stock won’t be disadvantaged, planning for your future through property acquisition remains an intelligent long-term option. It’s a cliche but also a truism that property investment is a long term game. Real estate markets will always ebb and flow, so it pays to not get caught up in the here and now of short-term market volatility. Look to the future and take heed of how the suburbs you’re considering investing in have performed over a longer period.