However, the rental market is still extremely tight, peak body says
The vacancy rate in Perth has increased for the first time in six months, according to the Real Estate Institute of Western Australia (REIWA).
In July, the vacancy rate rose to 0.9%, aligning with REIWA’s quarterly property forecast.
“Perth has seen a sustained period of extremely low vacancy rates, sitting below 1% for 23 out of the past 36 months,” said Cath Hart, REIWA CEO. “It dropped to a 42-year low of 0.6% in December 2022 and has been 0.7% for the first six months of 2023. This month’s result is a move in the right direction, but it is still very low and vacancies are still filling quickly.”
REIWA considers a vacancy rate between 2.5% and 3.5% as indicative of a balanced market, with September 2019 being the last time Perth reached the 2.5% mark.
Hart said that the market has faced unique and challenging conditions over the past few years, including a significant exodus of investors. Additionally, delays in the building industry have impeded market turnover, leading tenants who had intended to build homes to remain in rental properties for extended periods.
“However, recently our members have been reporting more tenants moving out into their long-awaited new homes and this has been freeing up some supply,” Hart said. “They are also seeing strong interest from eastern states investors who see value in Perth prices and strong rental yields. This is slowly adding to supply as well.”
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Developers have also taken note of eastern states investors purchasing blocks of land. However, the effects on the rental market will take some time to materialise, as construction and completion processes inevitably introduce delays, REIWA said.
Hart also said that the increased certainty provided by the state government's May announcement regarding the Residential Tenancies Act has bolstered investor confidence, contributing to the market's positive trajectory.
The Perth housing market posted a record year in 2022-2023, seeing house price growth throughout the financial year despite multiple interest rate rises.
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