Many investors are failing to respond to the changing real estate market in Perth, where a glut of rentals means price adjustments are essential, says the Real Estate Institute of Western Australia.
REIWA president David Airey said many owners still think the market is like it was 18 months ago, when in fact, things have changed ‘significantly’.
“The vacancy rate in Perth is almost four per cent, with more than 6,000 available properties. Rents have come down and tenants have much more choice,” Mr Airey said.
Mr Airey said the slowdown in population growth and jump in rental listings was expected to continue through next year, and owners needed to adjust expectations.
“While the median rent in the metropolitan area sits at $450 per week, typical rents for houses have dropped by $10 and units by around $15, with REIWA.com.au data suggesting a further drop is coming before Christmas or in the New Year,” he said.
Mr Airey said more expensive homes in areas such as Claremont, Nedlands, Cottesloe and Mosman Park had seen big drops in rent of between 20 and 40 per cent when compared to 2012.
“Owners of luxury properties enjoyed a pretty good run until recently, but in the same way that the mining and resources boom has ended, so too has the boom for luxury rentals.”
Mr Airey said owners holding out for higher rents were engaging in a “false economy” because the lost income from several weeks of vacancy quickly outweighed the extra $10 or $20 per week they might be hoping for.
“The rental system now favours tenants, and is not likely to change any time soon. This means owners need to make sure the presentation of their property is at its very best and prospective tenants are offered creature comforts to secure a longer lease,” he added.
REIWA’s Property Managers’ Network co-chair Jenni Wood said tenants now had higher expectations with properties and will easily overlook those which do not meet their standards.
“Airconditioning is now an increasing expectation and tenants also look for good security with locks, latches, gates and solid doors,” she said.
“A lockable garage or carport area where they can secure their vehicle is also highly regarded, as is an outside entertaining, patio or balcony area.”
Ms Wood said that most importantly, a property needed to look its absolute best.
“Tenants don’t expect everything to be brand new, but they do expect everything to be neat, clean and tidy. If the property looks a bit tired, the carpet is worn, the garden is messy, the walls have scuff marks or the blinds have seen better days, then they will choose something else,” Ms Wood said.
Ms Wood agreed that many owners were being unrealistic and needed to consult with their property managers.
“They need to meet the market with better presentation and price adjustments if they want to avoid long vacancy periods and to attract good, longer-term tenants.”