Perth’s rental crisis has reached new lows, with the Real Estate Institute of Western Australia (REIWA) reporting that the number of homes for rental in the city has fallen to the lowest levels in over a decade. To be more precise, Perth’s rental vacancy rate is now sitting at 0.96 per cent, its lowest in 13 years, with Perth set to reach a new all-time low of 0.8 per cent, according to REIWA, eclipsing the previous record of March 2007. For just the third time in 40 years, the Perth residential vacancy rate has fallen below 1%, which has brought a number of challenges to tenants on the rental market.
Those who have managed to find accommodation are having to pay more, with figures released Thursday showing Perths rent prices rose by a further 0.9% in August, taking the year-on-year increase to 8.5%. Those struggling to crack into the rental market can take comfort from data showing that house price growth has slowed in the past decade.
Rent increases
With the Perth rental market experiencing low levels of supply and high levels of demand, rents are expected to increase 20 per cent or more. Perths rental inventory levels are at the lowest they have been for 12 years, even as 20 % of the population is competing for this pool of rentals.
Until the stock levels rise, the ongoing rental crisis is expected to continue creating challenges for renters looking for properties to call home. Supply continues to be an important factor impacting the rental market, with total advertised rental inventory at -35.4 percent below its prior five-year average. In addition to this, additional data for the June quarter revealed a 27% decrease in properties available to rent, which is hovering at about half of the level of inventory on the rental market when compared with a year ago.
Record-high views per listing
Regional areas are continuing to experience limited inventory of properties for sale, with high levels of demand for each listed property supporting rising prices in those markets. Record-high views per listing throughout most of last year reflected both very strong buyer interest and relatively limited inventory for sale, especially in regional areas. Despite recent moderating in views per listing, views per listing remains above levels recorded during the same time frame last year in some parts of the country, although this premium is diminishing in Brisbane (+34.5%), Adelaide (+58.1%), Perth (+21.8%), Melbourne (+6.8%).
Views per listing in Tasmania have fallen by 17.4 % since May last year, as the state of the property market has weakened from its record highs, with this being driven in large part by the 28.6 per cent drop from its record highs in Hobart. In Sydney, sales fell 35% over the three-month period through August from the same time a year ago; Canberra saw sales drop 19%, while Melbourne saw sales drop 16%, according to CoreLogic estimates. In Melbourne, the house value index fell 1.2 per cent in August, by 3.8 per cent in the last three months, 4.6 per cent since its peak in February, and, incredibly, by 2.1 per cent since August last year.
Canberra was the only capital city market to register a quarter-on-quarter decrease in dwelling rental values (-0.4%), driven by a decrease of -0.9% in rental housing. The gap between the two highest cost capital cities in Australia to rent – Canberra and Sydney – has closed to $17 a week, with rents falling in Canberra while house rentals have recorded stronger growth in Sydney. Sydney surpassed Canberra as Australias most expensive market for unit rentals ($594 per week), while Canberra remains the more expensive capital city for home rentals (730 per week).
Rents in Brisbane rose 22.2% over the last 12 months, averaging $557.77 a week, followed by Melbourne (19.3%), Adelaide (18.6%) and Perth (15.6%). Adelaide and Darwin have recorded a rental growth of 3.6% in the September quarter, whereas Sydney, Perth and Melbourne saw residential rental growth of 2.9%, 2.5% and 2.3%, respectively. Despite recent decreases, Canberra retained its position as Australias most expensive capital city rental market (just), with median weekly rental values at $682, followed by Sydney ($665 a week), Darwin ($590 a week) and Brisbane ($573 a week).
Vacancy rates
An analysis of vacancy rates in rentals conducted by the Everybodys Home campaign found that asking rents for apartments in Sydneys inner-city areas had increased by as much as $100 a week over the last three months, with historic lows for vacant properties. Rents across Australia are continuing to increase, but not at a pace you would expect given a shortage of rental properties and record-low vacancy rates across the nation. The number of homes for rent across Australias cities has fallen by more than half, reaching new historical lows over the last month, as a rent crisis takes hold. Western Australias vacancy rates in rentals are at the lowest they have been in over a decade, with experts warning more pain is on the way for people struggling to secure a roof over their heads.
While Australias rental market continues to tighten at record levels, the rate of rent rises has begun to soften, suggesting affordability constraints are having an effect. CoreLogic data shows that vacancy rates in homes and units across Perths Greater Opportunity Area fell to 0.6% and 1%, respectively, as the building industry struggles to keep up with demand from migrants, both from across state borders and abroad, who have been flooding into WA in the last couple of years. With only 8,250 properties now listed for sale in Perth, -3.5 per cent lower than the same time last year, and significantly lower than levels seen in 2010, buyers are now cautious about a falling average price but are nevertheless attracted to high-quality properties. We are already seeing an uptick in investors activities, with CoreLogic data showing that Perths rental values increased 4.8 per cent between January and September 2020, notably higher than the national average.
