Rentals will Keep Rising

21/08/07

Continued pressure on the rental market in 2007 will push rent prices up even further, say local real estate specialists.

Real Estate Institute of WA president Rob Druitt said high demand for rental properties was the main reason for continued rise in prices.
“In 2006 we saw an increase in housing value of 40% whereas rent prices only increased 20%,” he said.

Mr Druitt said a higher number of first homebuyers were being priced out of the market and eastern state ‘migrants’ were driving the demand.

“First home-buyers are feeling the effect of higher property prices and high stamp duty costs. Instead of buying a property, they rent for longer which adds additional pressure on the rental market,” he said. “More people are coming across from the eastern states and they are deciding to rent rather than buy.”

Geoffbaldwin.com chief executive Geoff Baldwin said that more investors would be focusing on suburbs with high rental returns.

“They (investors) will be focusing on suburbs which not only have a scarcity of rental suburbs where renters are prepared to pay a premium price to secure a rental property,” Mr Baldwin said. “They will be focusing on suburbs which also are relatively affordable and therefore have the potential to become positively geared in five years because of high rental growth.”

Mr Druitt said, if more investors were to enter the market, it would provide more supply for renters.

However, he predicted more investors would be ‘cashing up’ rather than entering the market at this stage.

After a rush of activity after the New Year, there will be a steady growth in rent prices as yields started to improve.

Mr Baldwin said the following suburbs would experience the highest rental growth rates over the next five years: Beldon, Heathridge, Mirrabooka, Westminster, Tuart Hill, Northbridge, Victoria Park, Spearwood, Coolbelup and Waikiki.

Kate Gilbertson - West Australian Jan 9th 2007-08-17