Perth’s Lowest Vacancy Rate in 42 Years Amid Positive Signs for Investors
Core Logic’s latest data show a 1.2 per cent growth in Perth's rental value in the month of December 2022. Despite this growth, there is still a pressing need for more rental listings to accommodate the growing demand from renters.
According to the REIWA CEO, Cath Hart, Perth's rental vacancy rate has fallen to its lowest level in 42 years. At the end of December 2022, the number of rental properties advertised also hit a 12-year low.
Perth, however, continues to be one of most affordable cities in Australia to rent. With the December 2022 quarter median rent at $553 per week.
"The vacancy rate has been persistently low for the past two years, briefly peaking at 1.2 per cent in March and April 2022, but largely under one per cent and more recently hovering around 0.7 per cent throughout September, October and November."
A balanced rental market is considered, with a 2.5% to 3.5% vacancy rate. However, the last time we had a vacancy rate of 2.5% was September 2019, according to Cath Hart.
The Perth rental market has seen a decreased advertised stock in recent years, leading to persistent low vacancy rates and rising rental prices. The low rental vacancy rate of 0.5% can be attributed to the exit of investors from Perth's established home market and the strong demand for rental properties from interstate and international migration.
Core Logic economist, Kaytlin Ezzy, also attributed the high rental demand to more people moving out of their homes and couples leaving shared houses during the COVID period. However, she did note that as rental prices rise, this trend may reverse.
Despite the decline in rental stock, Cath Hart says the rate of decrease has slowed, and the number of rentals in WA has been relatively consistent since October, indicating a positive sign. Additionally, the percentage of investor loans has increased from 18% to 28% in November 2022.
The Western Australia Tomorrow Population Report no.11 forecasts a population growth in Perth of just over two million by 2031. This increase in population would result in further pressure on the rental market as these residents would require housing.
"We hope investors look at WA's property market again, given our affordability relative to other states and the huge demand for more rental stock."
"These are positive signs, and although it will take some time to get back to balanced market conditions, we should start to see rental stock levels increase this year and the vacancy rate ease.", according to Cath Hart.
In conclusion, the rental market in Perth continues to face challenges with low vacancy rates and a decline in rental stock. However, the rate of decrease has slowed, and the number of rentals has remained consistent since October, indicating a positive sign. With Perth being one of the most affordable cities in Australia for buying and renting, the expected population growth presents investment opportunities for property investors. With the right market analysis and strategy, now is the ideal time for property investors to act in Perth.
