Last month, the Real Estate Institute of Australia released their Housing Affordability Report for the December 2020 quarter which showed Western Australia remains the most affordable place to rent a property in the entire country.
This represents the 14th quarter in a row that WA has been Australia's most affordable state, despite currently experiencing record low vacancy rates and a rental shortage.
WA rental findings
The report showed that although affordability in the WA rental market had declined on a quarterly and annual basis, the proportion of income required for WA tenants to pay the median rent was 17.8 per cent - which was still the lowest figure of any state or territory in the country.
To put this into perspective, while WA tenants use on average 17.8 per cent of their family income to meet rent payments, the national average is 24 per cent. At the higher end of the scale, tenants in New South Wales require 28.3 per cent of their family income to pay rent and in Tasmania its even higher at 29.5 per cent. The only other place in the country to come close to being as affordable as WA for rents is the Australian Capital Territory at 19.7 per cent.
Over the last year, we've seen the WA rental market heat up and between February 2020 and February 2021 the Perth median rent increased $40 per week to $400. This increase is largely due to the rental shortage WA is currently experiencing. There are far more tenants than available housing which is putting tenants in competition with each other and driving up rent prices.
While median rents have increased over the last 12 months, they are still lower than they were seven years ago. reiwa.com data shows that in 2014 the median rent price in Perth climbed to $450 - $50 more than it is right now, so there is still very good value to be had for tenants in the WA market.
Looking forward
Ultimately, the biggest challenge facing the state's rental market is an undersupply of stock. It is imperative that investors are incentivised to buy property in WA so we can keep rents affordable. The end of the rental moratorium will go some way towards rectifying this, but more needs to be done to ensure WA's private rental sector meets the housing demands of WA tenants.
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