New figures show Perth’s rental vacancy rate fell to 2.5 per cent in the September quarter. (Unsplash: Tierra Mallorca)
Real estate agents say a tightening in Perth’s rental market may point to a broader housing recovery, driven by a turnaround in population growth.
- The declining rental vacancy rate has combined with a steady fall in rental listings
- Rents are yet to increase across the board but are predicted to rise early next year
- REIWA says it is the “best indication yet” of a broader housing market recovery
Figures from the Real Estate Institute of Western Australia (REIWA) show the rental vacancy rate fell to 2.5 per cent in the September quarter.
That represents a tightening in the market since June, but the vacancy rate remains above the 2.4 per cent recorded earlier in the year, when real estate agents were tipping a rebound in rents on the back of stronger demand for properties.
REIWA deputy president Lisa Joyce said the Perth market was considered to have reached equilibrium when the vacancy rate hit 3 per cent.
At its current level of 2.5 per cent, demand was considered to be slowly outstripping supply, Ms Joyce said, meaning rents were likely to rise over time.
“There is 19 per cent less stock available … compared to the same time last year,” she said.
“That, combined with fewer days on market to achieve a tenant, puts more pressure on the rental market.”
Lisa Joyce says if the trend continues, rents will likely increase in the first quarter of 2020. (ABC News: Emily Piesse)
Overall, most suburbs — 117 in total — recorded no change in median rent in the September quarter, while 110 suburbs recorded an increase.
Meanwhile, rental listings declined by 17 per cent during the quarter.
Ms Joyce described it as the “best indication yet” of a broader recovery in Perth’s housing market, following repeated calls of the market bottoming out over recent years.
“We’re starting to see a steady decline in the vacancy rate, a steady decline in rental stock, a contraction in the number of days on market and we haven’t hit the peak of the market for 2019,” she said.
Relocation agents signal a population pick-up
Ms Joyce said two areas of the market in particular were showing signs of stabilisation — outer suburbs with high rental turnover along with an oversupply of stock, and inner suburbs popular with families moving to Perth for work.
“We’re starting to get interest now for families relocating for the start of the new school year,” Ms Joyce said.
Relocation agents were seeking rental properties at the upper end of the market for oil and gas workers, Ms Joyce added.
Pressure at the top end of the rental market is expected to trickle down. (ABC News: Giulio Saggin)
“The demand is certainly building in those sectors and it’ll be interesting to see whether there is enough stock at that end of the market to supply the interest.
“As we start to see pressure at the upper end of the market, that trickles down to those markets below that.”
But despite signs of a pick-up in demand, rents are yet to increase across the board.
The median rent for houses remained unchanged at $360 per week in the September quarter, while the median rent for units — at $340 per week — was marginally higher than in June.
Earlier this week, Moody’s Investors Service released a report which showed Perth’s median house price fell 4.3 per cent in the year to September, the largest fall of any capital city.
But Ms Joyce said the rate of decline in house prices had slowed and that, combined with signs of recovery in the rental market, may bring investors back to the market.
“Once you get stability in rentals, declines in the vacancy rate, slight pressure on the supply of property, you start to get increases in rents, increases in yields,” she said.
“When confidence is restored … and you start to get investors coming back into the market, that’s when you start to see an engagement between investors, owner-occupiers and traction in the market.”
Ms Joyce said she expected that if vacancy rates and stock levels continued to trend down, rents would likely increase in the first quarter of 2020.