The same would apply in other States around Australia.
In March 2012 REIWA (Real Estate Institute of Western Australia) put out a press release warning West Australians of a acute shortage in the rental markets with vacancy rates dropping to 1.6% but I can show the actual vacancy rate is closer to 4.2% !! (See details Below)
The WA Press reported this data as Gospel with no checks to validate its accuracy.
When reading this it is important to know that REIWA's numbers & data are not Audited or Independently verified.
Preliminary & Volatile numbers numbers but REIWA will use these anyway because they can't afford to waste any more time waiting months for the real numbers. REIWA members are struggling sales are stagnating REIWA has to drive demand get people buying no matter what it dose to their credibility. Talk about desperation / panic / fear!!
After putting out this press release REIWA President David Airey then spent the day on Talk Back Radio & other media outlets beating the "FEAR DRUMS" about "ACUTE" property shortages. He gave anecdotal stories of desperate Perth tenants having to pay $50 - $100 more than the asking price just to get a place to live in things were getting that bad. Then he quoted stories of Agents having 30-50 people showing up at inspections.
The motives of this Media Blits was clear for anyone to see. REIWA were trying to frighten people into buying a property or be homeless, forced to pay more & more for rent.
On the 14th March 2012 on the 720AM-ABC Radio Drive program a listener phoned in & challenged what the REIWA President was saying & made the following points:
1) The fall in rental vacancy numbers was not due to a fall in actual rental properties in the market but due to private landlords taking their "Rental Listing" off REIWA Agents & instead renting them privately because they did not see any value in having their property managed by a agent @ 8-10% fees ($35-$50 pw or $3,000pa)
2) The number of rentals available to rent was down because Investors were exiting the market & had taken their properties out of the market to fix them up to list them for sale. (David did not respond to this point)
3) Why would a agent who may have had 30 people at a previous opening bother opening another home for inspection when they had a list of 29 (One was successful) people from the previous weeks opening who they could simply call & offer the next property to. (David chose to ignore this simple question)
David Airey took offence to his REIWA "SPIEL" being questioned. He rejected outright that private landlords were taking their listings off his REIWA members & claimed that over 60% of off all private rentals were managed by his "REIWA Members" & that this was a clear indictation that Private Landlords recognised the benefits & value offered by his REIWA Members managing their rental investments & were happy to pay 8% for the privilege as it was money well spent according to him & that is why they had 60% share of the Private Rental Market.
Here is a Link to REIWA web page where again they FALSELY assert that they have 60% market share of the Private Rental Market : http://reiwaviews.com.au/2011/12/think-long-term-with-property-investing/
Quote..." Around 60 per cent of all rentals are managed professionally, meaning that investors who use this service have an advantage over properties managed privately, particularly in the selection of tenants and care of the dwelling"
This heated discussion on the radio got my curiosity up & I thought it would be a simple process to establish who was right & who was wrong.
A quick check on the ABS site should have been enough but to my surprise I was amazed to discover that the ABS relies on the REIA for this data. {THAT'S SIMPLY NUTS!!)
So there is no interdependent verifiable audited data available we have to rely on Realtors with vested interest for this data.
This is what the ABS says about Rental Vacancy Data around Australia: {http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Chapter9002008}
Rental vacancy rates
Information on the proportion of rental properties vacant in capital cities is collected by the Real Estate Institute of Australia (REIA).
{Talk about putting Dracula in charge of the Blood Bank it's a disgrace the ABS accept their numbers}
Anyway life was not meant to be easy so it took a little digging but was worth it in the end.
See extract below from Shelter WA report quoting Stats & numbers from the 2006 Australian Census to establish a base point that I could work from:
{http://www.shelterwa.org.au/documents/WA_Quick_Guide_final.pdf}
So from the report above we can establish that in 2006 there were 758,000 Private dwellings in WA & that 26% of them were in the "Private" rental market.
So in WA in 2006 there was a "Overall Rental pool" of approx 197,000. (Houses Units etc)
(This "Pool" included Public Housing Tenants)
Now in WA in a average year we build around 21,000 homes PA so since 2006 in WA 105,000 additional houses & units were added to the overall housing stocks & if 26% of them went to the "Overall Rental Pool" an additional 27,000 rental homes & units would have been added to the " Rental Pool" giving a rental stock giving a total stock in 2012 of approx 225,000.Houses & Units
Now ABS data tells us that 74% of Western Australia's population lives in the Perth Metro Area.
{http://www.abs.gov.au/Ausstats/abs@.nsf/Latestproducts/3218.0Main%20Features82010-11?opendocument&tabname=Summary&prodno=3218.0&issue=2010-11&num=&view=#PARALINK2}
So 74% of the 225,000 "Rental Stocks" in West Australia = 166,500 Rentals are Currently in the Perth Metro area.
Now in the Shelter WA report it also says that in 2006 Census Data showed only 40.6% of rental housing was managed through real estate agents!!
Now assuming that "Real Estate Agents" have not lost any market share since the 2006 Census it would mean that today "W.A. Real Estate Agents" only account for 67,600 Rental units under their management in the Perth Metro area.
(I have unsubstantiated info from REIWA & other credible sources sources that Real Estate Agents market share of the private rental market has actually dropped to under 35%. But seeing it is unsubstantiated I will work with the latest verifiable data. )
Now REIWA's Real Facts (Copies Below) shows that throughout Feb 2012 the average number of private rental properties available to rent each week in the Perth Metro Area was 2323!!
This means that the Perth rental vacancy rate in Feb 2012 would have been more like 3.3% because the rental pool managed by "Real Estate Agents" in Perth is only 67,600
So the actual vacancy rate is now almost double what REIWA claimed was the case in their March 2012 Press Release. (But it get worse than that keep reading)
(Remember the Press Release at the top REIWA claimed vacancy rate dropped to 1.6% in Feb 2012)
Now another interesting fact to consider is that in WA only 80% of Real Estate Agents in WA are actually REIWA Members. (In fact their membership has been in decline for several years)
(Proof only 80% Agents are REIWA Members: " ___ Today, REIWA has almost 1000 member agencies, representing more than 80 per cent of operating agents in Western Australia____" http://reiwa.com.au/About/Pages/Mission-statement-and-origins.aspx )
REIWA tells us they get this vacancy number from property advertised for rent on their REIWA.COM website, so it follows that the 2323 Vacancies in "Real Facts" is only 80% of the actual number of vacancies because only 80% of Agents are REIWA Members so the other 20% (Non REIWA Members) are not reflected in these numbers, so the actual overall number of vacancies would jump to 2,903 vacancies.
This would then give a "Real" vacancy rate of around 4.2% !!! {Not the claimed 1.6% in their press release}
{EG: 225,000 Total rentals in WA with 74% in Perth = 166,500 then with 40.6% managed by agents = 67,599 now REIWA's "Real Facts" show 2323 Vacancies & with REIWA members having only 80% market share the "Actual" total rental vacancies with "ALL" agents in Perth including non REIWA members would be 2,903 giving a actual vacancy rate around 4.2%}
Something else that is interesting is the fact that in REIWA "Real Facts" published every week they state that their rental vacancy numbers that they publish in "Real Facts" are based on vacancies advertised on their REIWA.COM website & "Other Sources"
WTF are "Other Sources" ???
It would be impossible for REIWA to cross match adverts for rental vacancies on other Real Estate websites (realeastate.com.au / Gumtree & domain.com.au etc etc) & newspapers like West Australian, Sunday Times & Community Newspapers etc
REIWA would need to cross match each advert on their website with every other vacancy advertised to establish a accurate vacancy number the time & resources required to do this would be astronomical.
I phoned REIWA consumer help line which is manned by "Volunteer" member agents & asked them about their rental vacancy numbers & how accurate were they & how do they keep them up to date?
Answer: "Some time back {Could not provide a accurate date} they (REIWA) took representative survey of their members to establish the size of the "Overall Rent Roll" of REIWA members from this they were able to establish what the total number of properties were under their management & the vacancy number in Real Facts is representative of that "Overall Rent Roll" based on vacancies advertised on REIWA.com website" this person was not able to explain how REIWA would cross match their vacancies with vacancies advertised elsewhere to eliminate duplication of the count, but assured me that their stats were reliable because REIWA had nothing to gain by fudging the numbers (Yeah right!!)
Well look at the chart below REIWA only use data from their REIWA.COM website & "Member Surveys"
If they crossed checked with other web sites or newspapers they would say so but in this chart they identify their "Other Sources" they refer to in their "Real Facts" & as it turns out the so called other sources is a "Members Survey"
20 - 50 People at each Home Open For Inspection ??
Please it makes no sense why would a agent open a rental property for inspection if the week before they had 20 unsuccessful applicants. 5 or 10 of these would have been suitable tenants but just missed out. It would be a simple process for the agent to ring applicants form previous home opens & offer them the new property as an alternative & in a market where it is alleged that there are multiple applicants missing out at each home open prospective tenants would be proactive & have their names registered at numerous agencies. So every agency would have several prospective tenants on waiting lists desperate to rent a property. the fact that they have to have a home open is indicative that there is nobody waiting on their books so therefore they have to have home opens. Also a lot of these applicants are just people are looking to find cheaper accommodation after perhaps been given notice of a rental increase that they cannot afford absorb so are then looking for a cheaper place, these applicants are not homeless with no accommodation but are currently renting somewhere & when they move they create another vacancy. The interesting stats in the "Real Facts" extracts above is the number of rentals are not falling but still fluctuate within a small 3-5% band. Wan't to see a real shortage go to Karratha / Hedland / Newman etc where "Real" shortages are creating rental yields of 10-13% even with modest 3x1 houses selling for $880K - $1.2Mil thats a shortage. Perth has a rental yield typically under 4% & this is confirmation that a shortage is non existent!!
$50-$100 Offers more than the asking price.
Please if that was the case it is more an indication that the listing agent has no knowledge of the market he is renting in & what price the market would pay. If your Agent is making these claims ask him to get another $50 pw for your property & watch the excuses fly as to why your property is different & wont attract that kind of money. I know of several people with rental properties in areas where stories have been floated about extra rents 0f $50-$60 pw have been offered to score the rental property, but when they have asked their agent to do the same they have been told the stories are not a true reflection of the actual reality in the market.
(So Who's Lying here I wonder?)
Now to be fair I do know of several instances where massive premiums above the asking rent prices have been offered, but these offers are being offered by people who have the financial capacity to buy a property and make mortgage payments twice what they are asking for in rents. These people are not interested in buying in a falling market & need somewhere to live in the meantime so are willing to pay that little bit extra. The "Traditional" tenant in the rental market is finding that they have to compete with these people from time to time in isolated cases. But REIWA would have everyone believe that this is the "New Norm" it is not & won't last & to imply otherwise is Misleading & Deceptive Conduct.
Remember REIWA are a body that has to create Fear & Panic & an impression that there is a huge demand to turn around declining sales (down 30-50%) otherwise people don't buy houses & their members struggle to gouge big fat commissions!!
"Real" rental vacancy rate are actually around 4.2% !!! {Not the claimed 1.6% in their press release} & I show clearly how I come to that figure unlike REIWA's unaudited Fantasy claims.
Do the maths for yourself don't be fooled into believing REIWA's unsubstantiated claims they are simply wrong!!
