It’s a great time to be a property investor in Perth.
Demand for rental properties is high, vacancy rates are low and new data shows that rents across most of Perth have substantially increased over the last year.
Big increases in rent values across the nation
Australia has recorded its strongest annual rent values uplift in more than a decade. New data from CoreLogic shows an increase of 6.6% in rent values over the twelve months from July 2020 to June 2021. This is welcome news for property investors, especially given as it comes after ten years of relatively lacklustre rent growth averaging only 1.8% a year since June 2011.
Substantial gains for Perth rents
Of the top ten areas across the country with the highest annual change in rents in the 2020-21 financial year, five were Perth markets. Considering Perth is made up of only six submarkets, it’s an impressive result.
|National ranking||Area||Rent increase 2020-21 FY||Rent increase June 2021 quarter|
|6th||South West Perth||17.6%||3.4%|
|7th||North East Perth||17.3%||2.8%|
|9th||South East Perth||16.5%||3.4%|
|10th||North West Perth||16.3%||2.6%|
What’s behind the increases?
The rent rises across Perth can be traced back to supply and demand. The five areas that experienced the biggest rent increases also saw an average 29.5% drop in rental listings over the 2020-21 financial year (and a 40% decline in Mandurah). At the same time, these regions saw a rise in employment in the mining industry, which could have increased the demand for rental properties.
A long-term reduction in investor activity could be a contributing factor. When employment dried up following the 2014 mining bust, so did the demand for housing. As rental returns fell investors withdrew from the market, resulting in a decline in rental listings across the 2010s.
Since 2020, COVID-related state border closures have led to the need for more resident mining workers here in WA, which has driven a rise in housing demand. This recent demand coupled with the gradual decline of rental supply since the 2010s has created the right environment for sizable rent increases.
What’s happening in the Perth rental market right now?
Tight vacancy rates and a low number of rental listings suggest demand for Perth rental properties remains strong.
In June, Perth vacancy rates were 1.2%. Although this is the highest vacancy rate Perth has seen since August 2020, it is still remarkably low. To put that figure into context, the national vacancy rate in June was 1.7%, and vacancy rates in Sydney, Melbourne and Brisbane ranged from 1.3% to 3.5%. A vacancy rate of 2 – 3% is considered the mark of a balanced rental market.
Listings also remain low, with only 2770 properties available to rent in Perth for the week ending 25 July. That’s 6% fewer than the previous week, 2% fewer than four weeks prior and 25% fewer than the same time last year.
What does the future hold for the Perth rental market?
COVID-related border closures will continue to influence the demand for rental housing here in Perth as one-time interstate FIFO workers need to stay put. Over time, the return of more investors to the market may slow down rent growth.
For more expert advice about the Perth rental market, contact our specialist property management team today.