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From the Desk of Cindy Knight, General Manager

General Manager

The State of Perth’s Rental and Property Management Market 2024/25

As amongst Perth’s leading real estate firm specialising in property management, here’s an update of the rental and property management market in Perth, Western Australia. The market has remained resilient amid shifting economic conditions, driven by strong demand, supply constraints, and broader macroeconomic forces such as inflation and monetary policy decisions by the Reserve Bank of Australia (RBA).

Market Overview and Property Valuations

Perth’s property market has demonstrated remarkable growth over the past year, outpacing other Australian capital cities. Dwelling prices surged by 6.2% in the last quarter, with an annual appreciation of 24.7%, making Perth one of the nation’s most dynamic real estate markets.

As of December 2024, the median house price in Perth stands at $745,000, while the median weekly rent is $660. Apartments and units continue to attract investors, with a median price of $500,000 and a weekly rent of $625 (REIWA).

Rental Market Dynamics and Vacancy Rates

The rental market remains highly competitive due to an undersupply of housing. The latest data shows 802 properties were leased in the last week of January 2025, a notable increase from the 591 rentals secured during the same period in 2024.

Although the vacancy rate has slightly increased to 1.4% from sub-1% levels in prior years, it remains lower than the long-term equilibrium of 2.5–3%, however, recent data suggest a trend towards continued increased vacancy rates and a market slowldown. This is confirmed by this week’s latest report from REIWA “Last week’s rental listings figure is 10.8 per cent higher than four weeks ago and 15 per cent higher than a year ago. which is 3.5 per cent down on the week prior”.

Supply and Demand Imbalance

Perth’s persistent housing supply deficit has been a key driver of escalating property prices. The December 2023 quarter saw a net shortfall of 3,658 dwellings, as population growth of nearly 20,000 people far outpaced the 4,373 newly completed homes. This imbalance continues to exert upward pressure on rental prices, particularly in sought-after suburbs.

Macroeconomic Factors: Inflation, Interest Rates, and RBA Policy

The broader economic landscape plays a critical role in shaping Perth’s real estate market. Inflationary pressures, coupled with RBA’s monetary policy, have had direct implications on property investment and rental affordability.

  1. Inflationary Pressures – Inflation has remained elevated in Australia, with the Consumer Price Index (CPI) increasing by 4.1% year-on-year in Q4 2024. Higher inflation erodes household purchasing power, making homeownership less accessible and increasing demand for rental accommodation.
  2. Interest Rates and the RBA’s Stance – The RBA has maintained the cash rate at 4.35% following a series of aggressive hikes in 2023. Higher interest rates have reduced borrowing capacity, pricing many prospective buyers out of the market and funneling demand into the rental sector. Investors, too, are reassessing property acquisitions due to higher mortgage servicing costs (RBA).
  3. Impact on Affordability – As mortgage repayments rise, landlords often pass these costs onto tenants, further driving rental increases. In fact, Perth has now been classified as the least affordable capital city for renters in Australia, with the median weekly rent of $629 consuming 31% of household income (Shelter WA).

Government and Legislative Responses

To counteract affordability challenges, state and federal governments have introduced reforms:

  • Rental legislation now limits rent increases to once every 12 months.
  • Incentives for build-to-rent developments aim to increase long-term rental supply.
  • Streamlined bond release processes reduce administrative burdens for tenants and landlords.

Conclusion: Navigating an Evolving Market

Perth’s rental and property management market remains buoyant, fueled by supply shortages, high migration, and economic forces such as inflation and interest rate adjustments. While rental yields remain strong, affordability pressures are a growing concern. Investors and property managers must adapt to a shifting landscape, balancing returns with sustainable, tenant-friendly practices.

As 2025 rolls out, the interplay between RBA policy, inflation trends, and government interventions will shape the trajectory of Western Australia’s real estate market. The ability to anticipate and navigate these factors will define success in property management and investment.

Final thoughts – Perth’s rental and property management market is characterised by dynamic growth, tempered by emerging challenges in affordability and supply constraints. However, the Perth rentals market is showing a trend towards a market slowdown as vacancy rates continue to climb upwards.  As stewards of property management, we will work towards navigating these complexities with acumen, ensuring sustainable growth while upholding the principles of equity and accessibility for all stakeholders.

 

Would you like to know more how we can help? Get Your Free Property Appraisal Today.

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