19/04/2010 - 12:12

Karratha rent jumps to $1,600 a week

19/04/2010 - 12:12

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The Pilbara town at the centre of the state's resources surge, Karratha, has seen its median rent jump to $1,600 a week in the March quarter.

Karratha rent jumps to $1,600 a week

The Pilbara town at the centre of the state's resources surge, Karratha, has seen its median rent jump to $1,600 a week in the March quarter.

The Real Estate Institute of WA today released regional rent data for the state during the three months to the end of March, which showed the weekly median rent in the Pilbara town had risen by $200 for a house.

The weekly median rent for a unit in the March quarterly was $1,150.

Conversely, the median rent in Port Hedland dropped by $250 to $1,200 a week.

Karratha is currently the centre of Western Australia's resources surge, with companies operating and developing multi-billion dollar oil, gas and mineral projects locating a part of their workforce at the town.

REIWA president Alan Bourke told WA Business News that the fluctuating rent prices in Karratha and Port Hedland was often a case of supply, which was affected by the Reserve Bank of Australia's move on interest rates.

"A lot of the buyers in the North West are investors looking for a straight deal," he said.

"For example, if they can get a 10 per cent yield on a $1 million regular house, then they will buy it; it provides them with good returns.

However, Mr Bourke said that when interest rates go up, those investors may re-think about buying property in the region, therefore affecting the supply issue of rental homes in the market.

Mr Bourke said that in Port Hedland's case, it could be the effect of RBA's pause on interest rates in the March quarter that caused a flurry of investors to buy property in the region, therefore increasing supply on the market.

Busselton was the only other region to show a sharp increase in median rents, with prices rising by $20 to $300 a week during the quarter.

Most other regions saw a steady rental market, with Geraldton-Greenough, Kalgoorlie-Boulder and the Greater Bunbury regions recording no change in median rents for houses.

Although the Geraldton region saw no fluctuation in its median rent, the vacancy rate of available properties did increase from 4.2 per to 5.2 per cent, a trend that may see some downwards pressure on median rents if it continues.

"By contrast, the vacancy rate in Kalgoorlie-Boulder tightened from 5.8 per cent in December last year, to 4.6 per cent during the March quarter. Again, if this tend continues it may have the effect of putting pressure on rent increases in the medium term," Mr Bourke said in a statement.

Although Bunbury recorded no overall change, it did see a big jump in median rents for units, which leapt from $265 per week to $290 per week during the quarter.

Closer to Perth in the Peel region, Mandurah-Murray saw its median rent increase by $5 to $290 per week, while the vacancy rate dropped by 0.2 per cent to 2.3 per cent. A rate Mr Bourke described as "quite low."

"The vacancy rate in the Mandurah region has tightened considerably from the 3.7 per cent it was showing in the September quarter last year.

"It may be that part of the reason for this is that the more affordable rents available in Mandurah have been attractive to some Perth residents who are moving to the seaside town and are able commute by train to the city if necessary," Mr Bourke said.

In Albany, the vacancy rate has grown from 3.8 per cent at the end of last year to 4.2 per cent in the March quarter.

This has seen median rents drop by around $10 to $280 per week.

Mr Bourke said the rental system in the regions was more sensitive to employment conditions and seasonal work opportunities.

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