Perth’s vacancy rate has dropped to its lowest level in 42 years, after falling to just 0.6 per cent in December.
New data from the Real Estate Institute of Western Australia (REIWA) showed the latest fall in the vacancy rate coincided with a low level of homes available, with stock levels dropping to a 12-year low in the final month of 2022.
REIWA Chief Executive Officer Cath Hart said Perth’s vacancy rate now at its lowest level in four decades.
“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.”
This month rental listings have increased to 1996 for the week ending January 15, which is 10 per cent higher than four weeks ago, but still 17.6 per cent below a year ago.
Ms Hart said regional markets were facing a similar situation with Albany recording a vacancy rate of just 0.3 per cent, while Kalgoorlie was at 0.5 per cent in December.
“Geraldton recorded a vacancy rate of 1.5 per cent, Bunbury 2.5 per cent and Broome 7.1 per cent,” she said.
“While Broome seems high, it is a seasonal market and the vacancy rate increases during the wet season.”
Ms Hart said the state desperately needed more investors to buy more rental properties, with delays in new home builds and landlords selling up resulting in 18,000 fewer investment properties available now than the peak in January 2021.
“This, coupled with strong demand, is what has contributed to the current shortage of rental properties,” she said.
“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 the rental market had changed significantly from pre-Covid times, back when the rental vacancy rate peaked in June 2017 at 7.3 per cent.
Weekly rents have also risen from about $350 per week for a house and about $320 per week for a unit.
“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,” Ms Hart said.
Despite the new low in vacancy rates, Ms Hart said there were positive signs for tenants in 2023 with the decline in rental stock easing.
“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,” she said.
“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.”