Why is there a Rental Property Shortage in Perth? Where has all the rental property in Perth gone to?
Vacancy Rates
Only two weeks ago, REIWA’s CEO Cath Hart remarked that Perth’s vacancy rate has dropped to its lowest level in 42 years. “Perth’s rental vacancy rate fell to just 0.6 per cent in December, its lowest level since 1980, when the Institute began keeping these records,” she said.
A balanced rental market is said to have a vacancy rate of 2.5 to 3.5 percent, however the last time this was achieved was in September 2019 at 2.5 percent. Over the last year, vacancy rates have been hovering at a persistent low of under 1 percent.
Weekly Rental Increase
Domain’s rent report for the December 2022 quarter shows the average weekly rental for a house in Perth rose 6 per cent to $530, and 15.2 per cent year-on-year, the highest increase across the nation’s capitals.
Domain chief of research and economics Nicola Powell commented that this phenomenon “… marks the longest stretch of continuous house rental price growth ever recorded for Perth”.
Housing preference indicates a more competitive demand for houses compared to units.
Why has there been a shortage?
What has caused this sudden spike in rental demand? Where has all the rental stock disappeared to? Factors that have led to this rental crisis include:
- Overseas migration to close pre-pandemic levels
- Foreign students returning to WA as a choice education centre
- Tourism influx with the borders opened
- Delays in new home completions
- Investors selling out of Perth’s established homes market in significant numbers
- Fewer rentals available coupled with strong demand due to the mining boom
- Influx of labour supply to support the resources industry
According to CoreLogic researcher, Eliza Owen, Perth is no longer Australia’s most affordable capital city for rentals, with data of average rentals as follows:
– Melbourne $507 per week
– Adelaide, $518 per week
– Hobart, $552 per week
– Perth, $553 per week
– Brisbane, $588 per week
Given that 85% of all rental stock is owned by private investors in Western Australia, the government continues to ensure policy settings will encourage private investors otherwise there will be increased pressure on the Government to provide housing.
