What does the changing rental market mean for investors? 

Perth’s rental market has shifted. After several years of strong rent price growth and low stock, rents have stabilised, supply is increasing and the vacancy rate is rising. 

These changes have repercussions for investors, but an understanding of local conditions will ensure long-term investment success. 

Rent prices 

Perth’s median rent prices for dwellings and houses have held steady at $650 per week since March 2024. The median weekly rent for units has been $600 per week since March, rising to $620 in July, before dropping back to $600. 

What does this mean for investors?

If you are renewing a lease with an existing tenant, any increases to the rent are unlikely to be at the same pace as in recent years.

If you are seeking a new tenant, it is less likely they will offer significantly more than the asking price to secure the property.

Investors need to speak to their property manager about the market conditions in their area so they can price their property appropriately. 

Supply and demand 

The changes we’re seeing are a result of changes to demand and supply.

The nature of demand has changed as tenants seek to cope with the growth in rent prices and the challenges of finding a rental. We have seen an increase in tenant household sizes as people seek to share the cost-burden of renting. People are also choosing not to rent if possible.

Supply has been slowly increasing as completed investor-owned new builds come to the market. Some tenants are also having their long-awaited new homes completed, allowing them to move out and free up some established homes.

While the frenzied conditions of the past few years have eased, the market remains fairly competitive, however this is likely to change as supply continues to increase.

Investors need to be aware of these changes and ensure they remain competitive in terms of price and the appeal of their property.

Rental yields

Perth’s property prices have risen strongly over the past 12 months, which is good news for existing investors, but the emerging stability in rent prices means yields have declined slightly for those looking to enter the market. 

Despite this, there are still opportunities for strong returns.

The key is to arm yourself with local knowledge so that you can buy or build, wisely. Ensure you buy/build in areas that are in demand and that you buy/build properties that will appeal to tenants. This will help maintain long-term demand for your investment.

Suburb profiles on www.reiwa.com can provide valuable insights to guide your property search, including rent prices, growth rates, time on market and demographic profiles. Also speak to local property managers about demand in the areas in which you are looking to buy or build.