Not Everything in Perth Property is Cooling – Just Ask Renters

Headlines might suggest the Perth property market is in trouble. But talk to anyone looking for a rental right now and you’ll hear a very different story.

The number of rentals available across Perth has fallen below 2,000, and conditions are edging back towards the rental crisis seen at the height of COVID, when the vacancy rate sat at around 1%. 

REIWA considers a balanced market when the vacancy rate sits between 2.5-3.5%. Perth’s current vacancy rate is 1.7%.

Perth rents have been fairly flat over the past six months. But if these conditions continue, there’s only one direction they’re likely to head – up.

What we’re seeing on the ground

“The stats confirm what our team is seeing every day,” Rent Choice General Manager Clare Christiansen said.

“There are more renters competing for fewer homes, and the way they’re applying has changed.”

Here’s a few changes we’ve noticed over the past 6 months.

• Busier inspections: a recent Rent Choice listing, a 4x2 house in Scarborough, had 30 groups through. It’s not limited to lower price points, with strong competition at the higher end too.
• Creative renters: we’re receiving more applications from mixed families, such as two single mums and their children sharing a home.
• Dwindling new stock: a typical month sees four to eight new builds available through our portfolio. Right now, we have none in the pipeline.
• Higher offers: we advertise with a price range, for example $650-$720 per week. Six months ago, most applications came in at the lower end. Lately, they’re arriving at the higher end of the range we advertise.

A perfect storm for rental supply

Three factors are combining to squeeze Perth’s rental market right now:

1. Fewer new investors: rising interest rates and changes to negative gearing and the CGT discount have deterred new investors from buying.

2. Investors selling: many existing investors have sold. Clients tell us they want to cash out while prices are high, and some are worried about the Federal Government’s tax changes.

3. A brick shortage: Perth’s already slow building sector has hit another setback. The state’s only brick supplier has put builders on rations. The WA Government has put in $4 million to restart a mothballed site, but it won’t be operating until at least March next year, and some builders doubt how much relief it will bring.

What it means for perth rental prices

While the sales market is softening after several years of intense conditions, the rental market is a different story.

We’re yet to see rents take off again, but if supply stays this tight, we expect prices for houses and apartments to rise in the short term.

For landlords, pricing correctly is key. Compare property type, age, location and supply in your suburb before setting your rent.