Investors to Return

According to Core Logic’s latest monthly data, investors comprise only 17 percent of mortgage demand across WA, the lowest level of any state or territory. By comparison, in NSW, 32 percent of all mortgages are investor loans.

But as the bullish markets of the east coast begin their retreat due to COVID-19’s economic impacts, Perth could easily become the next obvious target for property investors. That’s partly because gross rental yields for residential property at 4.3 percent in Perth is comparatively more attractive than Melbourne’s 3.2 percent and Sydney’s 2.9 percent.

I’d imagine rents in the big east-coast markets will drop thanks to a huge increase in rental stock available in inner Melbourne and Sydney thanks to the effective shut-down of short-term rental market. For example, inner city rental stock in Melbourne increased 36 per cent in April.

A further incentive is investor loans are extraordinarily affordable nowadays with fixed term rates as low as an unbelievable 2.49 percent.

For many savvy investors, now is considered a good time to seriously look at a Perth based property acquisition.

The risk of doing so are mostly short term and centred around COVID-19 induced temporary changes to tenancy laws designed to further protect tenants that limit a landlords’ right to terminate a tenancy where rents are no longer being paid. These laws are due to end on 30^th September this year.

Investors will also be keen to see what further changes will be made to the Residential Tenancies Act by the WA government before making a definitive move.

WA needs property investors to return and our government will need to be careful not to over-extend in seeking permanent changes to laws that further disincentivise property investors by favouring tenancies. There is a disturbing trend across Australia that seeks to undermine the rights of property owners in favour of tenants. The recent ‘rent strike’ movement and changes to tenancy laws in Victoria are testament to this observation.

Obviously, it’s important to ensure all tenants are protected by laws that ensure they are entitled to the quiet enjoyment of their home, that essential maintenance and repairs are done well and quickly and that those landlords that break those laws are held to account.

The disturbing push from certain groups to further swing the balance towards favouring tenants inevitably discourages property investment. Limiting property investment always – yes always – delivers higher rents and less choice to tenants so what is it they hope to gain?

Privately owned investment properties provide millions of Australians essential and affordable (in WA renting is way more affordable than home ownership) housing. Without those investors, governments will need to provide those homes and in WA our government already has thousands of people waiting for them to be built.