By: Tom Winterbourn
House rentals in the Rockingham – Kwinana area are firming up to the point where buying a home is looking increasing attractive to some renters.
Rockingham Kwinana Chamber of Commerce president and Mortgage Gallery owner Justin Smith said the closing gap between weekly rental and mortgage payments was the first sign of a changing house market after several years of depressed values.
Ron Clues, chairman of the Rockingham branch of the Real Estate Institute of WA and principal of Secret Harbour Realty, agreed, saying renters at the bottom end of the market were being tempted by the current low interest rates to look seriously at become first-homebuyers.
Despite the “big four” banks raising commercial rates independently of the Reserve Bank, the higher rental market is making home buying a relatively attractive option.
Mr. Clues said rental prices had jumped since Christmas due to low availability of accommodation.
“Unfortunately, we cannot change rentals on a weekly basis; only when properties have become vacant,” he said.
“There is traditionally a lot of changeover over the summer months, between December and March, when people are looking for rentals for about 12 months.”
“And as rentals go up, the bottom end of the rental market firms up.”
Mr. Clues said those paying $300-plus rents in the Rockingham area would find buying first entry homes starting from $300,000 reasonably attractive, with homes at $350,000 to $360,000 at the upper end of the first-homebuyers’ market.
“Buyers would need five to 10 percent deposits and, of course, they would have to pay service charges, such as rates, water and electricity,” he said.
“Definitely, the current low interest rates would encourage renters to do their figures.”
“The Rockingham area has affordable housing and rentals, too, but they are becoming hard to get.”
Mr. Smith put the rental vacancy rate in the area at 2.5 to 3 percent.
“If more people are tempted to buy with the low interest rates, more rental properties will come onto the market,” he said.
“A person renting $300,000 house in Rockingham would pay about $300 a week, whereas if buying a property of the same value, first-homebuyers would pay just $80 a week more, plus service charges.”