Perth, WA: Rent, mortgage costs skyrocket as interest rates bite

A Senate inquiry into the cost of living has heard rents in Perth will continue to rise well into 2024, as housing supply remains a major issue.

Senators gathered in the Western Australian capital on Tuesday, where they heard from organisations and stakeholders giving evidence for a report to be handed down by the end of May.

CEO of the Real Estate Institute of Western Australia (REIWA) Cath Hart fronted the select committee on Tuesday afternoon, telling senators the cost of housing is a “significant contributor to the cost of living pressures.”

“Since May 2022, when interest rates started rising, we’ve seen rents [in Perth] increase by 17 per cent, and the average mortgage increase by nearly 50 per cent,” Ms Hart said.

“The rental market is particularly challenging, both in metro and regional areas. The rental vacancy rate fell to a record 42-year low of 0.6 per cent earlier this year — for context, we would consider a balanced market about 2.5-3.5 per cent.

“Rents have accordingly risen to a record high of $575 a week, and we expect that rents will continue rising over the course of this year and next, again due to those low stock levels, and as those investment property owners pass through their increased impost from interest rate rises.”

Ms Hart went on to blame the WA government’s rental moratoriums during the Covid-19 pandemic, as well as interest rate rises, on more than 18,000 property investors leaving the market since February 2021.

“Those people just voted with their feet,” Ms Hart said.

She appeared alongside Property Club founder and director Kevin Young, who said the rental situation in WA is “dire.”

“I think prices will go up 20 per cent, and I think rents will go up 20 per cent,” Mr Young said of the Perth market, although didn’t elaborate over which time frame these predictions would occur.

He suggested the federal government could make it easier to boost housing supply, without spending taxpayer dollars, by slashing red tape.

“It doesn’t need any government money, it just needs to pull down the red tape ensnaring the building industry … make it easier for the banks … it takes three months to put a loan application through; it once took about three weeks,” Mr Young said.

He also claimed about 250,000 new properties would be needed in Australia to restabilise the market.

“This situation is past desperate, it’s a catastrophe. And it’s so easy to fix,” he said, blaming 2015 and 2017 decisions by banking regulator APRA, which he said made the banks overcautious when it comes to approving home loans.

The committee is due to hand down its report on the cost of living by May 31, 2024.

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