Rents Still Going Through The Roof

22/06/08

Hermione Stott and Raquel De Brito

Sunday Times

June 21, 2008 06:00pm

PERTH'S rental market is still red hot, with tenants paying up to two months rent in advance to secure a property.

There are bidding wars and multiple applications for properties across the city, despite Perth's rental vacancy rate rising from 0.8 per cent in the March 2007 quarter to 1.4 per cent in March 2008, according to the Real Estate Institute of WA.

Real Estate Plus principal Milton Rendell said he was receiving up to five applications a week - three more than usual.

"There is still a lot of activity,'' he said. "People are paying $10 to $20 more a week in a bid to secure properties and paying months in advance, when the norm is only two weeks.''

Bellcourt principal Kirk Bellerby said that from December to February 2008, the rental market in the western suburbs was "out of control'', but lately had cooled.

"Back then, I could get up to 25 groups through one property,'' he said.

"Now, the market has softened and it is because rents are so high.

"A classic example is that we have a one-bedroom apartment and at the peak of the market, it rented for $750 a week for a short-term, three-month lease... now it has been vacant for four weeks at $600.

"Ninety per cent of the calls we are getting are from relocation agents trying to find executive, long-term accommodation for professionals, mainly from the mining boom.''

Renters were getting wise to the idea that buying was sometimes a better financial decision.

"People are thinking 'Why am I paying $650 rent per week in Subi when I can buy a one-bedroom for $320,000?', the repayments are pretty much the same,'' he said.

O'Rourke Realty Investments principal Rory O'Rourke said the property investment market was poised to rebound because of WA's surging population.

He said WA's population jumped by 2.4 per cent during 2007 - higher than any other state.

WA's population grew by nearly 50,000 people last year, close to 1000 people every week.

"With up to 300,000 migrant visas expected to be granted in Australia during the 2008-2009 financial year, WA's population should continue to soar,'' Mr O'Rourke said.

"This is good news for the property market because rising population increases the underlying demand for rental accommodation.''

If current trends continued, the median weekly rent in Perth could jump by up to 20 per cent during the coming financial year due to the severe shortage of rental accommodation.

"With building approvals falling during a time of rising population, there will continue to be an upward pressure on rents because fewer new rental properties are being constructed.''