Rental Market Clarity

Many investors with rental properties are in the midst of a challenging market right now. This can mean a stressful or confusing time for them.

Our property management division is working with many clients who are finding the current climate difficult and I thought it appropriate here to talk about what I see the future may hold for the rental market.

The rental market softened significantly over 2010 and these early parts of 2011. This means rental returns have also softened and investors with residential properties for lease need to have a very realistic view of the market in order to keep their properties leased. Right now, investors need to keep informed and in touch with the market and cannot over estimate their returns, being realistic is absolutely key in these sorts of conditions. Some investors need to understand that rental pricing is set by market conditions and not by an owner’s loan servicing needs.

Yes, this means that you need to price your property competitively and if you don’t you may find your property goes uninhabited until you meet the expectations of tenants. This may sound harsh, but the news is not all bad for investors because the right fundamentals are lining up for an increase in rental demands.

The thing is, the right economic and social factors are lining up in this state. Unemployment is low, the mining and resource sector has a strong outlook and people are continuing to migrate to WA in impressive numbers. Interest rates are also a major factor and while they are not great news for investors in the cost of money sense, they do mean many people need to rent, rather than buy.

For investors, the rental market is likely to see a sustained and solid growth in demand in the medium term. The good times are not here yet and I’d say we still need to see out the first half of 2011 before we see a meaningful shift.


The thing about property is that it runs in cycles, it goes up and it comes down and each different part of the cycle has certain benefits and challenges depending on what your exposure is. Investors need to understand this and they need to have a long term outlook on property. An investment strategy based on the expectation of overnight boom conditions and extreme capital growth is not realistic.

So investors, I’d say the order of the day is to remain cautiously optimistic. Be realistic now and do your best to secure a good tenant to ride you out until the positive conditions consolidate. Embrace the advice of your property manger, make the most of the market knowledge they hold. Take this advice and I think you will find it will pay solid future dividends.

Need and investment Property Manager?

Contact either:

Verity Hodge 0408 004 459

OR

Jessica Featch 0404 493 771