Perth rental market at lowest ebb in more than 40 years

While the top 10 list of most searched for suburbs in Perth is dominated by aspirational lifestyle locations, the reality for many West Australians is that they are trying find a rental in the worst market in at least four decades.

Perth’s vacancy rate fell to just 0.6 per cent in December, its lowest level since 1980, when the Real Estate Institute of Western Australia (REIWA) began keeping such records.

In a market where 2.5 to 3.5 per cent is considered a balanced rate, the figure sheds some light on the struggle facing thousands of renters unable to find somewhere to live.

REIWA CEO Cath Hart said the last time Perth had a healthy vacancy rate of 2.5 per cent was September 2019.

Ms Hart said the latest fall in the vacancy rate reflected the low level of rental stock available, which reached a 12-year low at the end of December.

“Regional markets are also experiencing low vacancy rates, with Albany at just 0.3 per cent and Kalgoorlie at 0.5 per cent in December,” Ms Hart said.

“Geraldton recorded a vacancy rate of 1.5 per cent, Bunbury 2.5 per cent and Broome 7.1 per cent. While Broome seems high, it is a seasonal market and the vacancy rate increases during the wet season.”

Top 10 suburb searches

While the rental picture is one of desperate people contending with high rents and long queues at property viewings, aspirational Perth property buyers are increasingly searching for real estate in some of the more affluent suburbs of the West Australian capital.

REIWA data showed that suburbs close to the city dominated the list of most searched suburbs.

Wembley received the highest number of searches in the previous year at 38,000.

Other suburbs that are most sought after by buyers are Scarborough (34,602), Subiaco (33,009), Mount Lawley (31,836), Duncraig (30,688), Wembley Downs (30,063), Como (29,828), Karrinyup (28,843), Floreat (28,646), and Hillarys (28,373).

While Wembley’s median house price of $1,424,000 is more than double Perth’s median, its apartment market still offered an entry point for young families seeking access to well liked government schools.

“Demand has seen prices increase in the past two years, and this has had a ripple effect as people gravitate towards neighbouring suburbs that are more affordable,” Ms Hart said.

The institute noted that the list was dominated by lifestyle locations.

“Scarborough came in second place, and it offers coastal living with attractions like the Sunset Markets, beachfront pool and foreshore,” Ms Hart said.

She added that suburbs like Subiaco and Mount Lawley were also known for offering great inner-city lifestyles.

While Ms Hart acknowledged that the searches may not always translate into sales in the suburbs that made the top 10 searched list, it highlighted the features that buyers find appealing, such as proximity to good schools, the beach or river, entertainment and dining precincts, and transport.

Glimmer of hope for renters

For those searching for a rental, it remained a landlord’s market but there were signs of hope.

Perth rental listings increased this month, reaching 1,996 for the week ending 15 January. This is 10 per cent higher than four weeks ago, albeit still 17.6 per cent lower than a year ago.

Ms Hart said with a new record low rental vacancy rate, one of the things that WA needed most was investors who were willing to buy a property that they would lease to someone else.

“Over the past two years we’ve seen delays in new home completions and investors selling out of Perth’s established homes market in significant numbers, with more than 18,000 fewer rentals available now since the peak in January 2021,” she said.

“This, coupled with strong demand, is what has contributed to the current shortage of rental properties.

“We hope investors look again at WA’s property market, given our affordability relative to other states and the huge demand for more rental stock.”

Despite the new low in vacancy rate, Ms Hart said there were positive signs for tenants in 2023.

“Despite the overall decline in rental stock, bonds data shows that the rate of decrease has eased and the number of rentals in WA has been fairly stable since October,” she said.

“The proportion of loans to investors is also up, rising from 18 per cent of total housing loans in 2019 to 28 per cent in November 2022.

“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.”