The number of rentals in the state has fallen by almost 5,000 in the past 12 months
Rental stress is set to continue in Western Australia, with government bonds data showing the number of rentals in the state has fallen by almost 5,000 over the past 12 months.
There were 219,679 bonds at the end of March, a loss of 861 properties so far this year and a drop of 19,000 since the peak in January 2021, according to the Real Estate Institute of Western Australia.
The data comes after a report from the National Housing Finance and Investment Corporation (NHFIC) revealed that WA was facing the largest housing shortfall in Australia over the next five years, REIWA reported.
THe NHFIC report said that WA faced a shortfall of 25,200 new properties from 2023 to 2026. The nation as a whole faced a shortfall of 106,300 dwellings.
“The alarming aspect of this report for us is that WA alone was identified as requiring 25,200 dwellings,” REIWA CEO Cath Hart said. “This is nearly a quarter of the entire national shortfall even though we are only about 10% of Australia’s population. It’s a huge concern for our market. Renters will be the most impacted, and we can expect the rental crisis to worsen and put more pressure on government housing.”
Investor exits
Hart said that supply and a stable regulatory environment were the largest issues facing the WA property market.
“While making new properties available is part of the solution, we also need to look at why investors are continuing to sell out of WA investment properties,” she said. “The fall of 5,000 rentals since last year has been an ongoing trend, and the bonds data shows we’ve actually lost over 19,000 rentals in the WA market since January 2021. The priority needs to be how we get those 19,000 investors to come back and buy a property they will lease to someone else – and, perhaps even more importantly, ensure that those people who do currently own a rental property hang onto it and keep renting it out.”
Hart said one of the biggest concerns for investors was legislative uncertainty, especially around WA’s Residential Tenancies Act (RTA).
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“The vast majority of rental stock in WA is owned by small, private investors. After a five-year downturn for the property market, COVID struck and investors faced emergency restrictions and were in limbo for 12 months,” she said. “The data is unequivocal about what happened next – as soon as the moratoriums on evictions and rent increases were lifted, investment property owners began a mass exodus from the WA market, which is what has meant there are now 19,000 fewer rentals in WA than in January 2021.”
Hart said that current investors are nervous about the debate over rental reform in the state.
“There are already significant pulls to exit the WA market with 10 interest rate rises, a bulk of mortgages switching from variable to fixed rates and a broad recovery in WA home values,” she said. “Policy needs to prioritise the needs of the community, and what the WA community needs right now and over the coming years is people who own a home they are willing to lease to someone else.”
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