Perth Rental Prices Accelerate Again
Those closely following Perth's property scene will have observed a subtle change in rental prices in recent months.
After a prolonged period of relative stability throughout much of 2024 – including an eight-month stretch where the median dwelling rent held firm at $650 per week – rental prices have begun to trend upwards once more.
The latest figures released by REIWA indicate that the median rental price for a Perth dwelling reached $680 per week by the close of March.
This translates to an almost 5% increase in rental values within the preceding four months.
Analysing the Drivers Behind the Recent Price Increase
Interestingly, several key indicators suggest a cooling trend within Perth's rental market.
Population growth, while still present, has moderated from its recent peak of 3.4% in September 2023 to approximately 2.5%, according to the most recent ABS data from September 2024.
Furthermore, the volume of rental listings in Perth has expanded by roughly 15% over the past year, indicating an increase in available properties. This rise in supply has contributed to an increase in Perth's rental vacancy rate, which now stands at 2.5% – its highest point since September 2019.
Despite this slowing population growth and the influx of new rental stock, the fundamental metrics of the Perth rental market remain relatively tight.
REIWA considers a balanced rental market to have a vacancy rate between 2.5% and 3.5%. Based on this benchmark, Perth remains on the edge of being undersupplied.
Moreover, while population growth has eased, it still remains notably above the state's long-term average of approximately 1.8%, according to the latest available data.
Considering these factors, it becomes clearer how upward pressure on rental prices can still exist.
It's also important to acknowledge that rental prices are not solely determined by vacancy rates and population growth. Factors such as shifts in household sizes and the overall sentiment of consumers can also exert influence on pricing dynamics.
Looking Ahead: Sustainability of the Recent Price Rise
Regardless of past trends, property investors and tenants are primarily focused on future developments.
The key question is whether this recent uptick in rental prices will evolve into a more sustained period of growth, or if it is merely a temporary fluctuation as the market continues its post-COVID adjustment.
Assuming the current economic outlook for Perth remains stable, another COVID-style surge in rental prices is not anticipated.
The more likely scenario is that the recent increase in rental prices will be temporary, influenced by Perth's ongoing slower population growth and the continued addition of new rental listings to the market.
However, it's crucial to recognise that Perth is not a single rental market. For property investors in Perth, understanding the specific dynamics within their local area is paramount.
On the ground, our team is observing varying conditions across the metropolitan region. Some areas continue to attract significant numbers of prospective tenants at home opens (20 or more groups), while properties in other suburbs are seeing considerably less interest.
Ultimately, the key for property owners is to price their rentals strategically, taking into account both the specific characteristics of their property and the prevailing supply and demand conditions within its particular suburb.
