Perth vacancy rate at lowest level in 40 years

REIWA CEO Cath Hart said latest data shows Perth’s vacancy rate has fallen to its lowest level in 42 years.

“Perth’s rental vacancy rate fell to just 0.6 per cent in December, its lowest level since 1980, when the Institute began keeping these records,” she said.

“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 1 per cent and more recently hovering around 0.7 per cent throughout September, October and November.

“We consider a balanced rental market to have a vacancy rate of 2.5 to 3.5 per cent - the last time we had a 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.

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

Many regional areas also have very low rental stock levels.

“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.”

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 bonds data showing 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 that investors look again at WA’s property market, given our affordability relative to other states and the huge demand for more rental stock.

“We also have to ensure we have policy settings that encourage rather than discourage people from investing in rental properties in WA because we know that about 85 per cent of all rental stock is owned by the private market. When investors exit the market it simply puts more pressure on Government-provided housing.”

Ms Hart said Perth’s rental market had changed dramatically from pre-COVID times.

“For several years pre-COVID, Perth’s median house rent remained around $350 per week, while the median unit rental was around $320. The rental vacancy rate peaked in June 2017 at 7.3 per cent,” she said.

“It was a tenants’ market then, and there was not the level of competition and upward pressure on prices we are seeing now, which saw the median rent rise to $520 per week at the end of December.”

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.