This article is from the Australian Property Journal archive
THE heavily undersupplied Perth rental market saw vacancy rates ease marginally in July, to sit a still-extremely-tight 0.6%.
REIWA data shows that Perth has seen a sustained period of extremely low vacancy rates, with the vacancy rate sitting consistently below 1% since August of 2022. It dropped to a record low of 0.4% in March this year, and sat at 0.5% in April, May and June.
“This month’s figure is a move in the right direction, but it is still very low and vacancies are still filling quickly, particularly for properties in the more affordable price brackets,” said REIWA president, Joe White.
REIWA considers a balanced market to have a vacancy rate between 2.5% and 3.5%. The last time it was 2.5% was nearly five years ago – in September of 2019.
New data from CoreLogic shows Perth rents lifted by 0.3% in Perth in July, as the national growth rate slowed further from the widespread surge seen in recent years.
White said the Perth market had been experiencing unique and challenging conditions for several years, but there were signs of improvement.
“Rent prices are recording periods of stability, dwellings are taking slightly longer to rent and rental listings are increasing,” he said.
These are the result of changes to both demand and supply.
“Demand has been self-moderating. We are seeing an increase in the size of tenant households, and people choosing to buy over renting or choosing to remain in, or return to, the family home to avoid the rental roundabout,” White said.
“The market also appears to have reached an affordability ceiling. Tenants cannot afford to keep up with rising rent prices. They are either renting with other people to share the cost burden or choosing to rent smaller, more affordable properties.
New supply has meant an uptick in the number of rentals.
“Investor activity has been increasing over the past 12 to 18 months and, as well as buying established properties, investors have also been purchasing house and land packages. These new builds are being completed and are starting to come to the market. This is slowly boosting new supply. And there is more in the pipeline.”
The tight rental market and high gross yields continue to encourage investors into the housing market at a higher rate than owner-occupiers, Australian Bureau of Statistics data shows.
White said some tenants have finally had their new homes completed and are moving out of their rental, which frees up some existing supply.
“We are still a long way from a balanced market, but the numbers are encouraging.”
