WA’s tight rental market ‘needs every property it can get’

The Real Estate Institute of Western Australia (REIWA) has flagged the figures, with CEO Cath Hart remarking that it is positive to see stronger investor participation within the state’s market.

She acknowledged that Western Australia “lost a significant number of rental properties from the market post-COVID”.

“Our tight rental market needs every property it can get, so it is good to see investor loans increasing,” she said.

Despite the uptick in loans, Hart conceded that “unfortunately, despite the increase, our data does not yet show an increase in the number of rental properties, so the significant imbalance between supply and demand in the rental market remains”.

And while loan figures do not state where investor money is hailing from, Hart cited anecdotal evidence from REIWA members that they saw strong activity from eastern states-based investors across the 12-month period.

“They’re drawn by the value our market is offering,” Hart shared.

“Despite increases over the past few years, our property prices are much more affordable than the east coast and we’ve had significant rent price growth. This means properties have the potential for very good yields,” she outlined.

Over the course of 2023, investors focused their attention on building – the number of loans for land rose 21 per cent, while the number of loans for building rose 52.7 per cent.

According to the CEO, builders and developers had also been reporting strong sales to east coast buyers, considering it as “good news” which will “boost rental supply in the longer term as these houses are completed”.

A different story for owner-occupiers

Bucking the investor trend, the ABS data showed that the number of new owner-occupier loans was down by 12.2 per cent in 2023 when compared to 2022 figures.

Lending for building was also down by 20.5 per cent, while lending for existing dwellings had also decreased by 11.9 per cent.

Looking into land, and the number of loans declined 10.9 per cent.

The CEO stated that the number of building loans had been declining since the conclusion of state and federal COVID building incentives, which caused a “massive spike” in construction loans across 2020 and early 2021.

While it was initially good news for housing supply and the building industry, Hart conceded that the resulting boom “saw construction costs rise and completion times blow out significantly”.

“Confidence in the building industry fell and people focused more on the established homes market,” she pointed out.

“You can see this in the change in the proportion of loans for building and existing dwellings. The proportion of loans for building was 22 per cent in 2021, with 63 per cent of owner-occupier loans being for existing dwellings. Compare this with 13 per cent for building and 71 per cent for existing dwellings in 2023.

“This lack of investment in new builds is concerning as WA desperately needs more new homes,” she surmised.