- Perth's vacancy rate drops to a new low, driven by supply and demand mismatches.
- Strong investor interest in Perth amid tight rental market, with ongoing challenges.
- Investor-friendly policies and a steady supply of homes essential for Perth's rental market.
Renting in Perth just got a whole lot tougher as vacancy rates dived to a brand new low in September.
Coming in at 0.7% for September, the vacancy rate is a 0.1 percentage point drop from August, according to The Real Estate Institute of Australia (REIWA).
“After rising to 0.9 per cent in July, the vacancy rate has been declining again,” said REIWA CEO, Cath Hart.
“Long-term trends show rental listings tend to decline in the lead-up to the end of the year, so the vacancy rate is likely to remain low in the coming months.
“It dropped to a record low of 0.6% last December, and the data suggests that’s very possible again.”
Cath Hart, REIWA
Hart commented that Perth’s overheated market was caused by a supply and demand mismatch in the capital city’s rental market. Specifically, demand has been far outpacing the dwindling rentals available.
“Western Australia’s (WA) strong population growth is maintaining demand for rental properties, and the ongoing delays in the building industry are keeping people in their rental properties longer, impacting the usual turnover of the market,” she said.
The Perth housing market is not faring any better, with Perth’s properties also seeing similar prices resulting from a recent surge of migration.
Investor interest remains high
“While we continue to see strong interest from Eastern States investors and the decline in the number of rental properties in the market appears to have stabilised, demand continues to exceed supply,” said Hart.
“It’s a problem that’s been years in the making and won’t be solved overnight.”
Property investors have been flocking into Western Australia as of late, with investment into the capital city having jumped from 9% to 32% in the past year, drawn by the population growth, relative affordability, and investor-friendly legislative environment.
Hence, Hart said that the state needed to remain investor-friendly while delivering a steady supply of new homes to improve the state’s tight rental market.
“Investors are facing a number of challenges, including the rising costs of mortgages, insurance, and council rates. Legislation is one more factor for them to consider,” she said.
“A prime example is the COVID moratorium. When that ended, investors voted with their feet, and there was a mass exodus from the market.
“The finer details of the changes to the Residential Tenancies Act are still to be decided. While investors have been reassured by the retention of no grounds terminations and the State Government ruling out rent caps and freezes, they are still concerned by the potential changes regarding pets and modifications to rental properties.
“Our rental market relies heavily on private investors, and decision-makers need to keep this in mind. We can’t afford to lose more rental properties.”
Cath Hart, REIWA CEO
