Pilbara rental vacancy rates ‘punishingly low’

While rental affordability has deteriorated across WA, Karratha and Port Hedland have felt the double-barrelled impact of both the resource boom and pandemic-induced construction pipeline challenges. The Bankwest Curtin Economics Centre (BCEC) revealed a drastic decline in rental affordability in the regional centres with median rental prices up 92.7 per cent in Port Headland and up 82.7 per cent in Karratha over the last five years. BCEC director Alan Duncan explained median house rents in Karratha and Port Hedland are running ahead of any other regional capital in WA, and have been since well before the pandemic. REIWA data shows median weekly rents in both regional centres reached $850 in the first quarter of this year. BCEC director Alan Duncan said the supply of rental property is failing to keep up with the growing demand in both Karratha and Port Hedland. “Clearly, as the resource sector strengthens, it drives up demand for housing, both purchased housing and rental accommodation.” “Vacancy rates in a lot of the regional centres are punishingly low, that in itself is an indication of very significant excess demand for property.” Only 1.1 per cent of all rentals in Port Hedland are currently on the market, this figure drops to 0.9 per cent in Karratha. This is not the first time the resource sector has driven up rents, Mr Duncan said there is always a strong relationship between regional population movements and the strength of the resource sector. REIWA president Joe White agreed resource sector activity has had a “direct and strong” impact on rental affordability in the Pilbara. “We’ve been living in very good times in WA so we are, in a sense, a victim of our own success,” Mr White said. “At the end of the day, if you have people coming to your state, you have to put them somewhere, and we don’t have houses to put them into.” Making matters worse, Mr White said a COVID-induced “over stimulus” of the housing market has led to a jam in the housing supply pipeline. He said the state-wide shortage of construction materials and labour is worse in regional areas like the Pilbara. “There’s a lot of property under construction, but until those properties move through to completion we’re not going to see an increase in the stock of housing,” Mr Duncan said. While rents are expected to remain high for some time, Mr Duncan said there is some hope on the horizon. “We hope to see completions increasing over the course of 2023 that may act to reduce some of the pressures that we’re seeing,” he said. “Even if vacancy rates were to ease tomorrow, it takes some time for them to flow through into lower rents.” BCEC research shows that rental vacancy rates need to be higher than 3 per cent before rental cost pressure begins to ease. Karratha vacancy rates have remained below 2 per cent since 2019 according to SQM Research. “It’s got us all with our pants down and we’re all just going to have to have the good grace and patience, maximum tolerance, minimum judgement, and just build these damn things as quick as we can,” Mr White said.