It’s a ‘landlord’s market’ as Perth’s vacancy rate hits a record low
Perth’s record low vacancy rate is creating a ‘landlord’s market’, as a growing number of investors seek out new real estate to capitalise on low rental availability and high returns.
The city’s vacancy rate fell to its lowest in 42 years in December, plummeting to just 0.6% – the lowest since 1980.
The vacancy rate has continued on a declining trajectory for the past two years, peaking briefly at 1.2% in March and April last year and hovering around 0.7% for September, October and November.
Mont Managing Director Matthew Podesta said the record low rental vacancy rate and dire shortage of rental stock meant it was a “landlord’s market”.
“While there has been some hesitation amongst would-be owner-occupiers in making property purchases with rising interest rates, there are still significant opportunities for investors in WA,” Mr Podesta said.
“Perth continues to be one of the most affordable cities in Australia when it comes to buying real estate, the number of available rental properties is at an unprecedented low and rental return is high,” he said. “Not to mention, more and more people are moving to WA for lifestyle and job prospects, with many, at least initially, needing a rental to call home.
“Property investors have a lot to gain if they turn their attention to Perth.”
Real Estate Institute of Western Australia Chief Executive Officer Cath Hart said the latest fall in the vacancy rate reflected the city’s low rental stock levels, which hit a 12-year low in December last year.
REIWA data shows Perth rental listings increased in January, compared to December, but the number of available properties was still 17.6% lower than a year ago.
“We consider a balanced rental market to have a vacancy rate of 2.5% to 3.5%. The last time we had a vacancy rate of 2.5% was September 2019,” Ms Hart said.
“Over the past two years we’ve seen delays in new home completions and investors selling out of Perth’s established homes market in significant numbers, with bonds data showing more than 18,000 fewer rentals available now since the peak in January 2021,” she said.
“This, coupled with strong demand, is what has contributed to the current shortage of rental properties. 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% of all rental stock is owned by the private market.”
Ms Hart said the proportion of loans to investors had increased, rising from 18% of total housing loans in 2019 to 28% in November 2022.
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