Hegney Property Group has reported that rents in Perth rose by 6.8 per cent in 2011 and that vacancy rates that are currently at about 2.8 per cent are expected to tighten even further to 2.0 per cent by the end of 2012.
"That means that rents will continue to rise for the foreseeable future, which is good news for landlords but pretty tough if you’re renting,” said UDIA CEO Debra Goostrey.
“Tenants faced with those rising rents would be well advised to compare what they’re likely to be paying in the coming year with the cost of a new home.”
“There are lots of very attractive packages on the market right now and there is every indication that the housing market is bumping along the bottom and poised for recovery.”
“One promising sign of that recovery is that Perth’s home values rose by 0.5 per cent seasonally adjusted in November according to the RP Data-Rismark Home Value Index, this was the highest rise of any capital city.”
“Western Australia has an estimated shortfall of 28,000 dwellings according to the National Housing Supply Council Report and that’s what’s putting pressure on rentals.”
Ms Goostrey said that with its low construction rate, Western Australia was falling behind in the number of homes it needed to house a population that was growing very fast. According to ABS figures Western Australia recorded an increase of 55,838 people in the year to June 2011.
“When the housing market inevitably picks up that housing shortfall will be very apparent.”
In the recently released HIA Economics Update on Housing, the past softening of prices in the market was noted but the industry group now believes there is a reasonable prospect of returning to dwelling price growth at some stage in 2012.
The HIA cites the two recent interest rate cuts and the potential of more to come as a key factor for housing price growth.
"On balance, the HIA Economics Group's view is that there is now a decent prospect of a return to dwelling price growth at some stage in 2012. Barring a complete melt-down in Europe, as interest rates retreat further, prospective investors are increasingly likely to favour housing over term-deposits or shaky equity markets. Meanwhile, as the cost of repayments start to align more closely with rent payments, current tenants are also likely to look at making the leap into home-ownership".
The current favourable movement in interest rates combines with other factors that ensure the Australian housing market is underpinned by strong fundamentals. These include, an overall housing shortage, increased levels of savings by Australian borrowers, as compared to the period prior to the GFC, economic growth fueled by the mining sector and an increase in lending for existing residential properties which is likely to lead to increased buyer activity".
