For many it may seem easier to find a needle in a haystack than an affordable rental in the Perth market, especially with rental prices skyrocketing to be on par with larger cities such as Melbourne and vacancy rates on a steady decrease.
While rent hikes have been fast, Perth still finds itself the joint second most affordable city in the nation, according to the Domain Rental Report for the 2021 March quarter, ceding top spot to Adelaide.
According to Ray White Whiteman & Associates Director David Whiteman, the recent rises in rents have come on the back of a long-depressed market.
“Many tenants have actually been enjoying a rent holiday due to the poor economic conditions in Perth from 2015 until 2019,” he said.
“A lot of our rental owners were beside themselves because they couldn’t pay their mortgages.”
According to the most recent Domain Rental Report, house and unit median rents in Perth increased $15 per week over the first quarter of 2021, continuing a trend of increases over three consecutive quarters and making the rate of annual hikes the fastest since 2013
The recent rental price surge has seen many tenants settle for less when they could originally afford a larger home in closer proximity to the city.
“Back in 2015 when rents dropped, a lot of tenants thought the value for money was better,” Mr Whiteman said. “If they could get a three-bedroom, two-bathroom property for $400 then they could afford a four-bedroom, two-bathroom property, so they upgraded.
“Now due to rent increases, a lot of tenants are downgrading and moving back into a more affordable property.”
Edison Property Residential Property Manager Adam Scott said rents had increased across the board.
“Rents have increased throughout all of Perth and surrounds, including renewals on leases and properties being re-let,” he said. “Increases have been varied on the types of properties available and supply in the areas.”
Mr Scott said Perth was quickly becoming a desirable city to live in due to its comparative affordability to other cities, as well as its largely successful response to COVID-19.
“Perth and Western Australia as a state are in a very strong economic position,” he said. “Applicants are prepared to pay more to secure a property.
“The current tenant market is predominantly Perth locals, however, in the last 12 months Perth has become one of the most desirable cities, resulting in the return of Australians both internationally and interstate.”
In order to solve the rental shortage crisis, both Mr Whiteman and Mr Scott agreed more investors needed to enter the market to create more supply.
“Perth needs an increase in property investors, as well as making the most of rental returns,” Mr Whiteman said.
“There’s a growing issue for self-funded retirees – if you’ve got your cash in the bank, you’re not going to get a great return with low interest rates. People will start to look to alternatives in shares or property. As the rents increase and there is a reasonable return on your investment property, those people will start to come in.”
Mr Whiteman said contrary to popular belief most investors had a modest portfolio.
“A vast majority of people in our management portfolio only have one investment,” he said. “They’re not overly wealthy, they’re just trying to do something different to get ahead in their superannuation savings or towards their children’s education.”
According to REIWA, the top rental suburb for the week ending May 16 was Perth with 23 leased properties. There were 419 houses rented across Perth and 315 units, leaving 1575 houses and 1295 units available.
“We have noticed houses and standalone villas or townhouses are the property types quickest to lease,” Mr Scott said.