The nationwide rental crisis has raised questions about whether imposing limits on the use of short-stay accommodations could offer a solution. However, statistics suggest this may not be the answer.
The Statistics
According to the Real Estate Institute of Australia (REIA), in the March 2023 quarter, Western Australia had a total of 10,091 short-stay accommodation. Of these, 47.3 percent were in Perth, with the remaining 52.7 percent located in regional WA. This number represents only 0.4 percent of total dwellings in the Perth area.
Further analysis from the REIA reveals that out of these properties, only 8,056 across Perth and regional WA are suitable for long-term rentals. Cath Hart, CEO of REIWA, suggests that to achieve a balanced rental market, we would require an additional 18,000 to 20,000 rental properties.
Considering these statistics, it becomes apparent that while limiting the number of days property owners can use their properties for short-term accommodations might bring more properties into the long-term rental market, not all owners are likely to make this transition. For instance, consider the FIFO worker who leases their property between stays or the family who owns a holiday home who leases it when they aren’t using it. These individuals won't necessarily make the switch regardless of the outcome.
Moreover, the properties made available for long-term renting may not necessarily align with the preferences and budgets of prospective tenants. Short-term rentals, such as those found on Airbnb, often occupy prime tourist destinations, where rental yields are higher. This may not be feasible for tenants seeking more affordable accommodations.
What is the problem?
It's essential to recognise that short-term accommodations are just one facet of a complex issue that has led to the rental crisis. Several factors contribute to low vacancy rates and housing shortages, including:
- A reduction in government housing
- Building delays
- Population growth
- Decreased investor participation
- Increased immigration
- Changes in shared housing dynamics
- Land development delays
- Bureaucratic planning approval processes
Blaming short-term accommodations simplifies a much broader problem.
Solutions
Potential solutions include the Albanese Government's commitment to a $10 billion Housing Australia Future Fund, aimed at funding social and affordable rental housing. While this is a step in the right direction, in the short term this is only 30,000 homes over the next five years. These homes will likely only scratch the surface while the issue continues to escalate.
Incentivising investors back into the market is likely to have the largest impact. However, it's essential to acknowledge that with limited property availability, constructing new dwellings might become the only viable solution. This could exacerbate issues in the already strained construction industry, causing further delays.
Unfortunately, there are no quick or straightforward solutions to the rental crisis plaguing our nation. With record-low vacancy rates, the market may deteriorate further before improving. Addressing this crisis necessitates a multifaceted approach that considers the various factors at play and combines short-term measures with long-term planning.
You might also be interested in
Apr 3, 2024
How to choose the right Perth property manager
If you own an investment property in Perth, you’re in a prime position to maximise your rental yields and capital growth in this market. To ensure you’re capitalising on this opportunity, it’s crucial to enlist the services of an experienced property management team. Here’s a guide to selecting the ideal team for your investment success: What makes a good property manager? Before committing to a contract, make sure your new property manager ticks the following boxes: They have industry knowledge: A property manager should eat, breathe and sleep Perth real estate and have a wealth of experience. This depth of understanding is crucial as it ensures that they have a clear understanding of the legal requirements of leasing a property and be across updates and changes to regulations. Understanding the law can make a big difference between a positive and a costly experience as a landlord, which is why it’s essential to work with an experienced property manager. They know the area: A quality property manager’s knowledge also needs to be local. When they’re familiar with the postcode your property is in, they can provide a more accurate price estimate and they know what to highlight to potential tenants. Mount Lawley, for example, is a great spot because it is close to the city, ECU and home to the popular Beaufort Street shopping/restaurant strip. They can identify a quality applicant: You should be able to rely on your property manager to vet applicants for your rental property and lock in reliable tenants. This means reviewing all aspects of an application and doing due diligence by speaking with employers, checking references and following up social media profiles. They are always responsive: The best property managers don’t leave you waiting days for a response, especially if there is an urgent situation. Their commitment to timely communication extends to your tenants, fostering a relationship built on respect and reliability. This translates into longer tenancy durations as tenants feel valued and cared for. They will be a master of documentation: A lot of paperwork is involved in rental housing, especially at the beginning and end of a tenancy. A quality property manager will ensure everything is signed and held securely. They will also contact you ahead of time as your rental contract comes to a close so you can make decisions about your investment property. When you work with an expert, you’ll also be kept up to date with strata fees, water and council rates and other costs, and be provided with detailed statements to share with your tax accountant at the end of the year They care about your outcomes: Many property agencies overload their property managers, which results in a lack of service as they find themselves stretched thin to meet the basics of their job. Working with a boutique agency like D Residential Group we ensure there is time to manage your property successfully offering a customised approach to suit your investment. How to find the right property manager in Perth. In early 2024, rental vacancy rates in Perth sat at around 0.7 per cent. This means property investors have a good opportunity to find tenants willing to pay a premium, especially in popular suburbs in and around Mount Lawley, Mount Hawthorn, West Perth and North Perth. To share some snapshots: Mount Lawley’s rental vacancy rates are around 0.95%, and 29.86% of its occupants live in rental accommodation. Mount Hawthorn’s rental vacancy rates are around 0.44%, and 23% of its occupants live in rental accommodation. West Perth’s rental vacancy rates are around 2.24%, and 46% of its occupants live in rental accommodation. Mount Hawthorn’s rental vacancy rates are around 0.91%, and 26.3% of its occupants live in rental accommodation. If you’re looking for a property manager in one of these areas, ask your shortlisted candidates about the local market statistics. Check how many properties they look after in the area and talk to them about the kind of tenant they will let the property to. Have a discussion about the amount of rent they believe your investment can achieve and how you could potentially increase this now or in the future. Check your Perth property manager’s reviews on Google and look out for what tenants say as well as investment property owners. This will give a clearer picture of the overall experience they deliver. Do you need a property manager for your investment property? Contact D Residential today.
Mar 5, 2024
Beat the competition when investing in Perth
It’s no secret that Perth has become the go-to Australian city for property investors. Locally based buyers now have the added headache of competing against people from all over the country and even around the world in what is already a tight market. If you want to beat the competition and buy property either as a home or as an investment, you need professional support on your side. Perth’s property price trajectory Since the pandemic, Perth has built its reputation for affordability and growth. It experienced several sluggish years but is now catching up to the rest of the country. Throughout 2023, the city’s property prices rose a whopping 15.2 per cent, comfortably above the next highest performer Brisbane at 13.1 per cent. However, despite the growth, median house prices in Perth sit at $660,754. Compared to Melbourne, where the median is $780,457 or Sydney, where it’s a whopping $1,128,322, Perth remains reasonably affordable. Being cheaper than other capitals has made Perth an obvious target for investors who are now competing with interstate and overseas buyers. The added challenge is a lack of stock; while developers and construction teams are building new properties, there is a shortage of quality homes and investment units in the most popular parts of the city. Your secret weapon for a faster Perth property purchase Because of the lack of stock and increase in competition, buyers are finding they need extra help, in the form of a buyer’s agent. This expert is a real estate professional who gives buyers the edge over the competition by acting on their behalf. When you work with a real estate agent, their primary client is the seller. They will give you some advice but their main interest is to achieve the best price possible for the owner of the property. On the other hand, a buyer's agent works only for you. Their job is to help you nail your ‘brief’, find a home and make it your own, sooner rather than later. According to Perth buyer’s agent Ray Chua, when you want to buy property in Perth, a buyer’s agent will help you to “save time in the research phase and get your weekends back. This expert will save you money by using strong negotiation techniques, while helping you to avoid the amateur mistakes that someone who doesn’t transact much in property may make. Most importantly, your buyer’s agent will help earn greater returns by selecting a better quality asset than you may otherwise have done by yourself.” How to stay a step ahead of the competition Buyer’s agents know the Perth market inside and out. They have the right knowledge and the right industry connections. One of the major benefits of working with a buyer’s agent is they have access to off-market listings. This means they can get you in to see properties that have yet to be widely advertised. As Ray explains, “There’s nothing wrong with looking at online listings since they are generally genuine sellers, but there’s a large pool of discretionary sellers, who would sell but have chosen not to, mainly due to not having enough certainty around where they would move to. Buyer’s agents can create mobility by working with a seller who isn’t really being proactive about moving on from their home. We give them more time to find their next home, and create a buying opportunity for our existing clients.” Your buyer’s agent will keep you that step ahead by staying connected with a network of real estate agents. They can find out what’s about to come onto the market before it does, helping you access the property ahead of the first home open. They can also negotiate on your behalf. “We ask the right questions and use our rapport and relationships with local agents as leverage to get a better deal,” says Ray. Make a smarter investment Perth may be booming now, but anyone who has followed real estate in the West knows that the market has clear high and low periods. The last thing you want is to buy property and end up with an investment you can’t lease out for the long term. A buyer’s agent has the skills to ensure you buy the right property in the right area so you will always find tenants and keep your rental income flowing. The final advantage of a buyer’s agent (and one that is similar to having a good property manager) is the network of professionals they are connected with. Ray explains that his business has “the benefit of trialing and testing various companies and keeping the best ones for our clients to use. This includes accountants, financial planners, mortgage brokers, property managers, building inspectors, reliable tradesmen and conveyancers. Property investment is like a team sport, and you need to surround yourself with the right team members to win the game.” Need a buyer’s agent to help you finally secure a place in Perth? Contact us today Already made your purchase? D Residential can provide quality property management tailored to you Find out more.