Commerce Minister, John Quigley announced the emergency period has been extended to Sunday 28 March 2021; with some revisions and various relief measures expected to continue to apply up until this date.
The Act restricts residential landlords from evicting tenants who are not meeting their rental payment obligations and prevents landlords from increasing rent on tenants who have occupied a property during the relief period.
John Percudani, Director of Realmark commented on this extension and some of the potential flow on consequences considering the decision.
“Although you can respect this effort has been made to protect tenants who may be facing hardship, there are concerns this nine-month blanket approach is not a balanced reaction to WA’s current economic and employment situation, and especially the medium-term housing demand that is evolving.
“This one-size-fits-all approach may also not be fit for purpose relative to the varying housing conditions across our metropolitan and regional markets in WA right now,” said John.
“Perth’s 1 per cent rental vacancy rate is effectively a ‘zero per cent’ vacancy, and according to recent data from Corelogic, Perth is presenting as the tightest rental market in the nation. It is also the most affordable residential property market of all Australian capital cities.
“There are serious concerns expressed across the property industry that the Government’s extended intervention is artificially holding back the market. Furthermore, it is supressing much needed investment activity that is needed to meet increasing demand.
“Perth’s current vacancy rate and affordability would normally be extremely appealing for investors; however, they are apprehensive about increasing their activity in WA. This is partially due to limitations caused by the emergency relief period’s extent of measures, as well as recent Government action that has bought forward and elevated first home buyer activity in the State.
“Unfortunately, we continue to see low levels of investor participation (around 15%*), despite having a lack of rental stock to meet demand of Western Australia's continued population growth. This is problematic, especially when looking forward to when borders re-open nationally and internationally,” said John.
There are concerns the relief in its current form is creating artificial market conditions, which may cause medium-term structural challenges in ensuring a healthy and balanced supply of affordable housing.
If not addressed, we are likely to see an expected spike in rent prices next year after three quarters of forced suppression and pent-up demand; with this trend in rising rents expected to continue.
The Government’s policies to stimulate economic activity via housing construction and efforts to boast tenant protection are necessary, however, there is a need to ensure the WA property market remains healthy and viable to meet the ongoing demand for affordable and diverse housing in metro and regional Western Australia.
The Government’s current actions may be in conflict and counterproductive to the real long-term needs and aspirations of WA’s housing market.