The latest data from the Real Estate Institute of Western Australia (REIWA) indicates a notable shift in the Perth rental market, with median rents remaining unchanged for the second consecutive month. This stabilisation suggests a potential easing of the market, as the sector experiences a subtle correction.
According to REIWA, the median weekly dwelling and house rents held steady at $650, while the median unit rent remained at $600. This plateau follows a period of significant growth, with rents increasing substantially over the past year. The median unit rent, in particular, has experienced a remarkable 20% surge since May 2023, while the median dwelling rent has risen by 18.2% over the same period.
This stabilisation is mainly attributed to two factors – an increase in supply, particularly in the northern corridor, and a shift in tenant behaviour. As affordability becomes an increasingly significant market driver, tenants are opting for smaller, more affordable properties or increasing the number of co-tenants. Additionally, some tenants are taking advantage of the current market conditions to transition into home ownership or return to family homes, thereby reducing demand.
The REIWA data reveals a modest increase in rent listings, with 2,409 properties available as of May. This represents an 11.3% rise from the previous month and a 20.5% increase compared to the same period last year. While the overall vacancy rate remains at a near-record low, the slight uptick in listings suggests a potential easing of the market.
While it is too soon to determine whether this stabilisation will persist, the market continues to exhibit pockets of competition, particularly for more affordable properties. Nevertheless, the current moderation in rental prices may just be the wecome relief for tenants have been waiting for, given the recent increase in prices.
The suburbs that experienced the most substantial growth in median weekly dwelling rent prices during May included Como (up 8.3% to $650), Armadale (up 5.8% to $550), Balga (up 5.5% to $580), Bentley (up 5.4% to $620), and Cloverdale (up 4.3% to $605). These areas have consistently demonstrated strong demand, with tenants seeking affordable options in proximity to amenities and transportation links.
In contrast, the sales market continues to exhibit strength, with median house prices rising by 3.2% to $650,000 in May. This represents a 17.1% increase compared to the same period last year. The median unit sale price also experienced a 2.1% increase to $435,000, an 8.7% rise over the past year. The ongoing demand for established housing is due to a combination of factors, including population growth, a constrained building industry, and challenges in the rental market. While the building industry faces capacity constraints, developers report strong land sales, indicating a desire for new housing stock. However, the limited availability of new lots remains an ongoing concern.
The suburbs that experienced the most significant median house sale price growth in May included Stirling (up 2.9% to $1,080,000), Beckenham (up 2.7% to $585,500), Bertram (up 2.7% to $554,500), Armadale (up 2.4% to $445,500), and Secret Harbour (up 2.2% to $670,000).
While the current moderation in rental prices may provide a welcome respite for tenants, the ongoing demand for established housing and the constrained building industry suggest that the market will continue to evolve in the coming months. Trends suggest that properties in higher price brackets are taking slightly longer to lease, with fewer offers of higher rent and, in some cases, discounting. As the Perth rental market navigates this period of stabilisation, tenants and landlords alike would do well to remain attuned to shifting market conditions.
