Perth Rents Rise At Start Of 2020

The past few years may have had their challenges for Perth property investors.

Now, with the effects of Covid-19 working their way through our health system and economy, there may be some challenging times still ahead.

But in the midst of this, there has been a small ray of sunshine with some great news for Perth’s landlords: rents have risen in early 2020 for the first time since January 2017.

The average Perth rent now sits at $360 a week, according to the latest figures from REIWA – a lift of $10 a week in just one month.

The main reason for this was a falling vacancy rate. In February, just 2.2% of all Perth rental properties were vacant. This is the lowest it’s been since the resources boom of 2013.

Because rents are set by the laws of supply and demand, it is also worth noting that the supply side has had some effect on rents too. Listings were down 9% of February, meaning there was less competition between landlords.

Tenants have been prepared to pay more to secure the right home to live in and the average days on market for a Perth rental property has fallen to 27 days.

Perth’s property market has stable rents for some time

While rents may not have been rising over the past few years, they haven’t been falling either. In fact, the average rent has barely changed for the past three years.

While this may not have produced stellar income growth for investors, it has meant that Perth has been a steady performer when it comes to return on investment.

Importantly, yields in our city tend to be much higher than in Eastern capitals. According to Corelogic, the average gross yield for Perth dwellings sits at 4.3% compared to 3.0% in Sydney and 3.2% for Melbourne.

Best suburbs for Perth property investors

According to REIWA, some of the best performing suburbs in February when it came to rising rental income included Stirling, Shenton Park, Ocean Reef, Thornlie and Bertram.

REIWA has also released a list of suburbs it believes property investors should seriously consider in 2020 based on yield and days on market.

Suburb Median days to lease Rental yield
Medina 17 7.5%
Armadale 27 6.2%
Parmelia 14 5.6%
Seville Grove 20 5.6%
Port Kennedy 27 5.6%
Banksia Grove 25 5.6%
Maddington 20 5.2%
Meadow Springs 24 5.0%
Forrestfield 21 5.0%
Clarkson 27 5.0%

Balancing rental income with growth

Of course, these figures only take into account one part of the investment equation – income – and not the other important part – capital growth.

Generally, more established suburbs will offer a lower yield but superior capital gains, especially in a quiet market. So investors should consider both of these factors when weighing up where to buy.

The impact of Covid-19

Finally, it goes without saying that we’re waiting to see what the full impact of Covid-19 and the subsequent shutdowns will be on rents.

As it stands, the Commonwealth government has announced that there will be a six-month moratorium on evicting tenants who fall behind in the rent due to the impact of the virus.

We’re still waiting to see the full details of how this will work and what the impact will be. However, the government’s recent announcement of a wage subsidy should go some way to helping those in financial distress can continue to pay their rent.

If you have any questions contact our team of experienced property managers today.

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