Rental demand could force home purchases
A Rockingham real estate agent says a squeeze on rentals in the area will force renters to look into buying homes, with vacancy rates dropping more than 4 per cent since 2014.
Professionals Rockingham director and sales executive Craig Small told the Sound Telegraph there was a “very strong” demand for rentals in the current market.
“At one point in 2017 the rental vacancy rate was over 7 per cent. It has now dropped to 2.6 per cent, a level not seen since 2014,” he said.
“We are now regularly receiving multiple tenancy applications on many of our available rental properties.”
Mr Small said the increased demand for rentals in the local market was due to a combination of factors. “A decline in building approvals has meant that there are fewer new homes being built and investors have not been purchasing rental properties at the usual rate in the past few years. This has reduced the amount of stock on the market,” he said.
The increased demand for rentals would inevitably lead to rent increases, he said. “This in turn should translate into higher volumes of property sales, as many tenants will decide that they are better off taking out a mortgage if it is cheaper than renting.
“Investors are also likely to start purchasing more properties as rent prices increase.”
Despite the small number of rentals, Mr Small said he did not believe there needed to be more properties made available, and said “supply should meet demand when investors start purchasing more properties, as has happened previously when there has been an undersupply of rental properties”.
“The changes in the rental market should have a positive impact by helping to alleviate the current oversupply of properties that are for sale and ease downward pressure on house prices,” he said.
According to Real Estate Institute of WA data, there were 427 rental properties on the market across Rockingham, Baldivis, Cooloongup, Hillman, Port Kennedy, Shoalwater, Safety Bay, Waikiki and Warnbro in the October-December quarter of 2018, with 207 of those in Baldivis.
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