What Perth’s Rental Price Growth Really Means for Investors

Perth’s rental market has undergone a dramatic shift over the past 5 years. With median rents increasing by roughly 90% over that period, it’s prompted an important question: are rents now overheated, or has the market simply reset to a new baseline?

REIWA data shows Perth’s median weekly rent has risen from around $370 in early 2020 to approximately $700 today. While the supply shortages and demand pressures behind this growth are well documented, the full story only becomes clear when we look at where the market came from.

Perth’s post-mining boom hangover

In the lead-up to 2020, Perth’s rental market was emerging from a prolonged downturn that followed the end of Western Australia’s mining boom.

Western Australia’s once-in-a-generation mining boom went bust in 2014. Major infrastructure projects slowed, population growth softened, and new housing supply reached its high point shortly after. The result was a market weighed down by excess stock, where rental supply consistently outpaced demand.

At the height of the mining boom, Perth’s median rent sat at around $600 per week. By late 2019, that figure had dropped to just $370 as listings flooded the market and landlords competed for tenants.

“By the time we reached 2020, Perth rents had fallen to levels that were well below long-term norms,” Rent Choice General Manager Clare Christiansen said. “That’s a critical piece of context that often gets overlooked.”

Although conditions were beginning to stabilise by 2020, the onset of COVID accelerated the recovery. Border closures and the return of tens of thousands of Australians living overseas rapidly tightened the rental market, placing renewed pressure on prices.

What does this mean for Perth’s rental prices today?

There’s no disputing that rental growth since 2020 has been sharp. However, it’s important to recognise that this growth followed the bottom of a lengthy downturn.

In many respects, the Perth rental market of early 2020 was not a “normal” market.  It reflected the aftermath (i.e. the bust) of the largest mining boom in Australia’s history.

“When rents are coming off such a depressed base, strong growth doesn’t necessarily mean the market is overheated,” Clare said.

Benchmarking Perth: How does it compare nationally?

Another useful measure is how Perth stacks up against other capital cities and states.

Despite the rapid increase in rents, Western Australia remains close to the national average when it comes to rental affordability. REIA data shows WA households spend around 24.2% of their income on rent, broadly in line with the national average of 24.3%.

WA is also more affordable than several other markets, including South Australia, the Northern Territory, Tasmania and New South Wales, where renters allocate a larger share of household income to rent.

“Perth’s rental growth has been strong, but affordability metrics show it’s not out of step with the rest of the country,” Clare said.

Perth rental prices: Where to from here?

Looking ahead, it’s unlikely the extreme conditions of recent years will persist indefinitely. 

Housing markets are cyclical by nature, and over time supply does respond to demand.

As new housing gradually comes online, rental price growth may begin to moderate over the next one to two years. 

Any easing, however, is expected to be modest rather than dramatic.

Barring a significant national or global economic shock, a return to pre-pandemic rental levels appears highly unlikely. 

Instead, Perth’s rental market is more likely to stabilise at higher price points than those seen during the post-mining boom downturn.

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