As any would-be tenant could tell you, the Perth rental market is very tight at the moment.
In fact, vacancy rates are the lowest they’ve been in many years. REIWA says it’s the lowest they’ve been in 40 years. We’re seeing queues at open homes, fielding loads of enquiries, and getting lots of hits on our website when a new property comes up for rent.
So why is it so hard to find a rental property in Perth at the moment? When will it get better, and in the meantime, what can tenants do?
What’s happening in the Perth rental market right now?
According to Domain, the rental vacancy rate in Perth in February 2021 was 0.7 per cent. To put that figure into context, REIWA describes a vacancy rate between 2.5 and 3.5 per cent as a balanced market.
The rental market is under pressure from a combination of two factors – more people looking for a rental property, and a decrease in the supply of rental properties.
There has been an increase in the number of prospective tenants looking for a new home as people return or move to Perth in response to COVID-19. Meanwhile, in March 2020, the State Government introduced a moratorium on evictions and rental price increases to help tenants financially impacted by COVID-19. These measures have meant more tenants staying put, and together with less activity from cautious property investors during the pandemic, this has led to a decrease in the supply of rental properties.
What happens now that the moratorium has been lifted?
The government’s emergency measures for the rental market were revoked on 29 March.
Experts are predicting a flurry of activity in the rental market as a result. Rents for newly advertised properties have been increasing since the beginning of 2021 and many believe that rents will continue to rise, causing some tenants to move on. Tenants can once again be asked to move out if they are on a periodic lease, in rent arrears or have not met other standards and responsibilities, which will also lead to more movement in the rental market.
What will need to change for the situation to improve for renters?
It doesn’t look like demand is subsiding any time soon, so the answer could be increased supply.
The market needs a greater supply of rental properties for vacancy rates to improve. The good news is there are new homes on the way. Government home building stimulus offered in 2020 resulted in the construction of thousands of new properties, most of which are due for completion in the second half of this year. It is estimated approximately half of the new houses being built will be occupied by people currently in the rental market. While this will provide some relief, with tenants who are building leaving the rental market, it’s not expected to have a huge impact.
Additional rental supply could also be generated by the return of property investors to the market. Investor activity usually increases when demand for rentals is high, as it is now. The COVID-induced economic downturn, the government’s moratorium and the increased competition from owner-occupiers deterred investors last year, but as the moratorium is lifted, the economic recovery continues and consumer confidence lifts, investors are predicted to return to the market. The challenge for investors wanting to enter the property market will undoubtedly be the supply of homes available. Sales listings are low.
What can tenants do?
Vacancy rates are expected to stay low for at least the next few months, so conditions will remain tough for prospective tenants, with competition for rentals high.
So, what can would-be renters do? Have your references lined up and ready to go, so you’re ready to make your move the moment you find a suitable property. Prepare your rental application thoroughly and carefully to give yourself the best chance of success.
Have a look at the great Perth properties we have available for rent here.