More properties needed as rents soar to new record
As Perth's median rent rose to a record $535 per week in February, REIWA CEO Cath Hart said WA needed 18,000 - 20,000 new rental properties to return to a balanced market.
“Perth’s vacancy rate is currently at 0.7 per cent, during a balanced market it usually sat between 2.5 and 3.5 per cent,” Ms Hart said.
“The last time it was over 3.5 per cent was September 2018 when it was 3.8 per cent. Since then our population has grown by about 6.7 per cent and is set to grow further.
“However, according to rental bonds data, in the past two years nearly 19,000 rental properties have been removed from the rental pool as investors exited the market to take advantage of long-awaited capital growth, to use the properties for themselves or in response to rising interest rates.
“This reduction in rental properties combined with a continually growing population is driving WA’s rental shortage.
“Delays in the building industry have also played a role as many tenants who took advantage of COVID building incentives are still waiting for their home to be completed and need to retain their rental accommodation in the meantime.
“And while we expect there to be some easing of the market as building completions improve, demand will remain strong as our population continues to grow.”
Ms Hart said there was no quick fix for the rental shortage.
“WA simply needs a lot more properties. Our modelling suggests between 18,000 to 20,000 are needed in the coming years to compensate for those that have been lost and keep up with population growth.”
“At local, State and Federal levels of government, we need policy settings that encourage rather than discourage people from investing in rental properties. This could be local planning policies, fair and equitable regulations on rentals, or tax settings for negative gearing or capital gains.
“We also need policies that support development in general so more houses can be built.
“REIWA welcomes the State Government’s announcement of an $80 million Infrastructure Development Fund to help local governments and developers offset the costs of providing water, sewerage and electricity services to new housing developments.
“These costs have been a barrier to new development and this assistance should help boost housing supply in Perth and the regions.”
Median rent price
Perth’s median rent price was $535 per week for February. This was $15 higher than January (up 2.9 per cent) and $85 or 18.9 per cent higher than February 2022.
According to reiwa.com the top performers were East Fremantle (up 64 per cent to $900 per week), Cottesloe (up 29 per cent to $875), Claremont (up 26 per cent to $698), Fremantle (up 22 per cent to $670) and Victoria Park (up 21 per cent to $520).
“Demand continues to exceed supply across Perth and, under current conditions, we expect to see more price increases in coming months,” Ms Hart said.
Listings for rent
There were 1,703 properties for rent on reiwa.com at the end of February, a decline of 9.1 per cent from January and 21.5 per cent lower than the same time last year.
Median leasing times
It took a median of 14 days to lease a rental during February, one day faster than January and two days faster than February 2022.
reiwa.com data showed the suburbs recording the fastest median leasing times were Kelmscott (four days); Bassendean (eight days); Coolbellup, Osborne Park, Palmyra, Seville Grove and Wandi (nine days); Greenfields and Shenton Park (10 days); and Atwell (11 days).
Corelogic home value index
CoreLogic’s Perth home value index decreased marginally in February, down 0.1 per cent from January and down just 0.2 per cent since November.
“Perth continues to remain stable,” Ms Hart said.
“Our market fundamentals are strong, with affordability, appetite and low availability driving the relative resilience of the property market.”
According to reiwa.com, the top performing suburbs for house price growth in February were Ballajura (up 1.8 per cent to $505,000), South Perth (up 1.7 per cent to $1,750,000), Port Kennedy (up 1.4 per cent to $461,500), Dayton (up 1.4 per cent to $477,500) and Balga (up 1.4 per cent to $375,000).
Swan View, Leeming, Willetton, Kardinya and Ellenbrook also recorded moderate growth.
Listings for sale
There were 7,299 properties for sale on reiwa.com at the end of February. This is a 5.1 per cent increase on January as Perth heads towards the traditional March sales peak, but 4.6 per cent lower than the same time last year.
reiwa.com weekly data showed property listings have remained below 8,000 and close to 7,000 since December 25.
Time on market
The median time to sell dropped significantly in February, down to 13 days from 23 days in January.
This was two days faster than 12 months ago.
“The data shows demand remains strong and highlights the resilience of the Perth market,” Ms Hart said.
Source: REIWA 1 March 2023