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Numbers not all bad news

WA has the dubious distinction of achieving the nation’s highest March quarter residential vacancy rate of 4.2 per cent, according to figures compiled by the Real Estate Institute of Australia.

However, this figure doesn’t spell doom and gloom for investors interested in shifting money into the property sector, according to Roy Western chief executive officer Geoff Baldwin.

Roy Weston sits in second position in the WA Business News 2002 Book of Company Lists behind Ray White Real Estate and is one of the State’s biggest agencies, with 46 offices around WA.

Mr Baldwin said several factors had pushed the vacancy rate up in WA.

“There are a couple of factors that have caused that [the vacancy rate],” he said.

“And one of those will reduce from here on in and that’s the first home owner’s grant.

“Probably another reason is [that] there’s a fair amount of development in some areas and so there’s something of an oversupply.”

An increase in the vacancy rate shouldn’t put investors off the property market, Mr Baldwin said, it was just a matter of “turning the equation on its head”.

“Rather than looking at the 4.2 per cent vacancy rate we should be looking at the fact that almost 96 per cent [of properties] are occupied,” he said.

“There are two main reasons why a property is vacant. One is the rent is too high and the second is it’s badly presented. So the selection of properties [for investors] is very important.”

In a flat market landlords are better off lowering the rent and getting a tenant in than leaving the property empty, he said.

“Another advantage of lower rent is that it opens a property up to a larger selection of tenants,” Mr Baldwin said.

Buying a property in the suburbs with the best rental rates in Perth was not necessarily the best strategy, he said.

“As an investor, if you’re looking to buy in a suburb like Joondalup you’ll probably get a reasonable price,” Mr Baldwin said.

The vacancy rate in Joondalup is quite high, however that’s the result of a number of big developments in the area.

“The fact is it’s a fast developing area and the new buildings will bring a lot of life to the area, so you’ll see terrific capital appreciation,” he said.

Century 21 Australia State manager (WA) Kent Murphy claims the rental vacancy rate has peaked in WA.

Century 21 is in third position in the WA Business News Book of Lists and has 260 full-time staff in WA.

“Certainly we believe the rate of vacancy has probably started to ease; it peaked at about 4.6 per cent in December,” Mr Murphy said.

“The growth in tenancy demand is starting to increase due to a rise in interest rates and a reduction in the incentive of the first home owner’s grant.

“Because of that change we believe the vacancy figures will improve. And investors are starting to come back into the market.”

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