Looking Back, Looking Forward
What a tough year it has been with the battle against COVID-19 for not only our Owners and Tenants but also the industry and a nation as a whole!
In the Property Management segment, the major impact over the last financial year was felt by the commercial sector whilst the residential markets were affected to a lesser degree. Here are some highlights over the last 12 months:
- This time last year, our residential vacancy rate was 2.9% and it stands at only 1.47% presently.
- TCS’s average weekly residential rent is up by $15pw from a year ago.
- Increases in rent upon re-letting have gone up from 1.74% twelve months ago to 15.9% now.
- Commercial Owners were hit hard with most tenants requiring some rent reductions following along the lines of the Commercial Tenancies Act (COVID 19 response). There is still a significant amount of deferred rent that is to be recovered over the next 12-18 months.
On a brighter note, here are some positive developments and trends:
- Based on recent statistics by the Australian Bureau of Statistics (ABS), investor confidence has begun returning as Investor finance in Western Australia increased 164 percent in April 2021 compared to April 2020.
- Real Estate Institute of Australia’s (REIA) most recent Housing Affordability Report states that WA remains the most affordable state for housing and rentals. The report further indicates that the proportion of family income needed to meet loan repayments stands at 24.8% while the family income needed to meet rent payments is only at 18.7%. These figures are well below the 30% mark suggested by most financial planners.
- The first time since December 2018, last month saw Perth’s median house price rise above $500,000, according to REIWA. Perth’s median rent price increased from $10 to $420 per week, a new record high since June 2015.
The most recent report from the WA Treasury indicates that Western Australia's economy has largely recovered from the impact of COVID-19 with strong support from the mining industry, however, the other sectors of the economy are still being significantly affected by travel restrictions. If you would like to know what we think will continue trending for 2021, see our article “Will Perth Continue to Sustain Its Growth Potential in 2021?”
Although it has been a tough 12 months, residential owners are seeing a light at the end of the tunnel with residential rents increasing as well as demand.