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Western Australians are celebrating a significant increase in investor lending, marked by the return of investor confidence and an impending, long-awaited resurrection of the state’s rental market.
New loan commitments for investors picked up by 2.1 per cent in April, to $8.1 billion – the highest level since mid-2017 – signalling their return to the market after a prolonged dry spell which has seen a rental crisis develop in much of the country.
But WA’s capital Perth has been hit particularly hard, with CoreLogic reporting a surge in rents by 16.6 per cent for houses and 14.2 per cent for units as of end-May, on the back of a few-years-long crisis.
However, hopes are now high, with investor finance levels increasing by an impressive 164 per cent in the state, according to the Australian Bureau of Statistics, spelling an end to the state’s rental troubles.
In fact, investor lending in WA now stands at $453 million, and while it is still shy of the $1 billion a month investment lending figures, seen during the previous market booms in 2014 and 2006-07, REIWA president Damian Collins believes a positive trend has been sparked.
“The April 2021 figures are the best we have seen since December 2015 and considerably higher than this time last year,” said Mr Collins.
“Low levels of investor activity in WA are a key reason behind the state’s rental shortage. Property investors and the private rental market are essential to ensuring tenants can find appropriate housing,” he noted.
According to Mr Collins, while investors started departing WA’s property market several years ago, the COVID-induced downturn exasperated the problem.
“Now that the rental moratorium is over and the property market is firmly in recovery mode, investor confidence is starting to return,” Mr Collins said.
“As investor levels increase and more available stock comes to market, this will help provide housing to tenants and ease the rental shortage. There are also a lot of investors choosing to sell now that were unable to during the height of COVID-19. Once this wave of activity subsides, we will see more improvement,” he added.
Noting that WA is not out of the woods yet, Mr Collins couldn’t hide his optimism.
“It is encouraging to see some light at the end of the tunnel for the WA rental market,” Mr Collins said.
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