As the city grapples with life after the resource boom, figures from SQM research this week revealed the vacancy rate in Perth hit 5% in June, the highest on record.
Despite the market’s seemingly obvious weakening, not all owners of rental properties in Perth are ready to accept the fact that they won’t be receiving the same rental returns they have enjoyed in recent years.
“We do have a lot of owners who bought their property when the big boom was happening and they’re often not as willing to budge on the rent as others. They throw at us that two years ago they were getting this much and we have to show them the market has changed so much in the last two years that there’s no way you can get the same rent,” Alana Collings, property manager at Perth Property Management told Your Investment Property.
“We show them what other properties are being advertised for and what they’re actually being leased for and still it can sometimes take their property sitting vacant for a while before they’re willing to change,” Collings said.
With Perth’s vacancy rate so high, Collings said landlords offering incentives to prospective tenants had become an increasingly common move.
“You can’t just leave the rents where they have been. You’ve got other owners out there and once one drops everything has to,” she told Your Investment Property.
“But we’re also finding that incentives are really helping. At the moment we’re seeing that a week’s free rent is about what people are willing to offer or a decent shopping voucher for somewhere like Coles Myer.”
Mark Whiting, director of Perth based Access Property Management, said he believes the rental market in Perth may be even softer than the figures put forward by SQM Research and other outlets and given that landlords need to ensure their property is in the hands of the right people.
“Say you happen to be looking for a two-bed apartment in a particular area of Perth, you could be presented with something like 100 different opportunities,” Whiting told Your Investment Property.
“People aren’t going to go and see 100 properties, they’re not going to see 50 or 20. They might see five and that’s where having a good agent or a good property manager becomes important,” he said.
While offering an incentive or rent reduction may convince people to sign a lease, if those methods are becoming common, then owners will still need to stand out from the pack.
“That’s when it becomes about how people decide on what properties to go and look at,” Whiting told Your Investment Property.
“You want somebody who is going to provide you with the right marketing to make it stand out. So things like making sure the photographs used based on the property, not just artistic photos that aren’t of any use to the tenant.
“You want somebody who actually knows and thinks about what tenants want. There are lots of agencies out there that are just sales based and they don’t allocate a lot of resources to the property management side of things.”
Both Collings and Whiting said landlords also need to be mindful of the condition of their properties as tenants are likely to say no to those not in good conditions given the current surplus of supply.
“We’re finding that tenants aren’t going in and looking at what’s good in a property, they’re more making decisions based off what’s bad and eliminating them by negatives,” Whiting told Your Investment Property.
While the current state of the rental market in Perth is just the latest in a long list of challenges the city’s property market has faced recently, Whiting said improvements are unlikely to be just over the horizon.
“It’s really crystal ball gazing at the moment. Anybody that tells you when it’s going to turn around is just guessing.
“We’ve had a big population drop in Perth and that’s really helped with the drop in demand required for the rental market. I thing if we see a population influx then that’s when we’ll see the market turning.”