The property market, like all markets, moves through cycles over the passage of time. At varying points in the cycle, conditions will favour home ownership over the reduced cost and overhead of renting…. and vice versa. Some food for thought on the current market should you be considering one of the two options for your domestic arrangements.
Rental vacancy rates are an important indicator of property market performance. Vacancy rates between 2.5% & 3.5% represent a solid balance in Market fundamentals.. At present, Perth rental vacancies are at an historical low. In July of last year, vacancy rates sat at 1.6%. That figure in July 2021 was 1.1%. What does that mean in real terms for a renter? Reduced property availability increases competition for those looking to rent, which in turn places upward pressure on weekly rental charges. Rent reviews are taking place all across the City at the time of writing, with weekly rates increasing between 7.5% & 20% – depending on location and features.
Commensurately, mortgage interest rates are very low – with variable and fixed rate options providing low cost finance. It is not uncommon in the current climate for traditional renters to shift to home ownership purely on the basis of “lowest cost option” – a month of renting associated costs can be higher than servicing a home loan debt, in specific circumstances. The long term benefit in purchasing now is the effect of rising median house prices on your equity position. Perth saw a 9% increase from the March quarter of 2020 to the March quarter of this year. First home buyers are also receiving substantial incentives from the Office of State Revenue – no stamp duty applicable for a purchase up to $430k and scaled reductions to a purchase price of $500k. Rebates toward your conveyancing costs may also be made available for purchases under $430k.
So on the basis of a tight rental market, low cost of finance, solid capital growth rates and Government support packages – there are compelling factors to support property purchase over rental at this time. This is predicated on an analysis of your personal circumstances, and your needs in the short to mid term. A good time to talk to lenders, monitor property sales and strike up a conversation with reputable settlement agents like Strand Legal & Conveyancing – servicing Perth property Vendors & Purchasers for 47 years.