Looking on bright side as WA braces for rental price surge

Perth is still blowing its eastern states counterparts out of the water when it comes to rent affordability near the CBD, even though the market is bracing for a price surge.

An investigation by the Australian Housing and Urban Research Institute (AHURI) and partner universities found low-income earners were struggling to find rental housing near employment hubs in Sydney and Melbourne, leading to commuting burdens and employment barriers.

The study found Sydney had the most extreme shortage, with 71 per cent of low-paid private renters honouring unaffordable prices.

According to the research, across all Australian metropolitan regions the percentage of lower-income households coughing up extortionate rent has escalated from 29 to 46 per cent over a 10-year period.

Perth itself is preparing to weather a predicted storm following the state’s rental moratorium, which ended on March 28 – the moratorium banned evictions and price hikes in the wake of COVID-19.

Nu Wealth Managing Director Daniel McQuillan predicted a 20 per cent jump in rent prices over the coming months, while REIWA President Damian Collins acknowledged a price rise was likely, but said Western Australia was still the most affordable city in the country.

Unpacking the state of the market, Realmark North Coastal Sales Associate Aaron Green said the metropolitan area boasted affordable rentals near the CBD, though numbers were still scarce.

However, he said those wary of current conditions should note the contemporary market was still far more affordable than during the last boom.

“With rental stock levels low and rent increases in Perth, it is important to note that houses still remain $70 per week below 2014 levels, and units are $100 cheaper on average than seven years ago,” Mr Green said.

“Perth spends approximately 18 per cent of their weekly income on rent and that is the lowest of any capital city in Australia.

“In other places, people are spending between 25 per cent and 30 per cent of their weekly income on rent.”

Mr Green said encouraging property investors to re-enter the market was essential to solving Perth’s rental stock decline and preventing prices from leaving low-income people in the dust.

He said his office was experiencing high demand for property in Perth and surrounding suburbs, with inner-city apartments shaping up to be particularly good investment options, as more and more people migrated to WA.

“Investors need to be encouraged to purchase property all over Perth,” Mr Green said.

“With the moratorium over, low interest rates, strong commodity prices and the rise in rent, a resurgence in investor activity could revitalise the Perth market, which is what we need.”

While Perth was recording comparatively inexpensive rent prices, AHURI Researcher and The University of Sydney Professor Nicole Gurran labelled the eastern states market as “critical”.

She said exorbitant prices in and around capital cities would have severe implications for urban productivity, possibly crush workers with affordability stress and pose challenges for businesses dealing with high staff turnover or looking to recruit new employees.

“The shortage is most acute in inner and middle-ring areas, which offer higher accessibility to greater concentrations of employment opportunities,” Ms Gurran said.

“There are also acute regional shortages in major employment areas such as the Gold Coast and Sunshine Coast in South East Queensland, as well as Newcastle and Wollongong in New South Wales.

“Consequently, low-income renters are either enduring affordability stress, commuting burdens, or both, in order to access employment opportunities.”

Ms Gurran said bolstering cheap stock was key to supporting economic growth in capital cities, supporting businesses that depended on staff retention and keeping the metropolitan labour market pool healthy.

Ms Gurran said the AHURI research paper, Urban productivity and affordable rental housing supply in Australian cities and regions, was finalised prior to the pandemic.

However, COVID-19 may have thrown even greater light on the problem, as many low-income workers have been unable to work from home during the unprecedented health orders of the State and Federal Government due to the nature of their jobs.

Tamra Carr  The West Australian

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